The probe of SAC Capital Advisors LP, which has led to insider-trading charges against the hedge fund and eight SAC employees, has snared an outside analyst who is accused of giving illegal tips to a former SAC manager.
Sandeep Aggarwal, 40, of Gurgaon, India, was arrested July 29 by agents of the Federal Bureau of Investigation in San Jose, California, said Peter Donald, an FBI spokesman in New York. He is alleged to have provided inside information to ex-SAC portfolio manager Richard Lee related to a deal involving Yahoo! Inc. and Microsoft Corp.
SAC Capital, owned by billionaire Steven Cohen, last week was indicted in what U.S. prosecutors called an unprecedented, decade-long insider trading scheme stemming from the government’s six-year crackdown on Wall Street crime.
While Cohen wasn’t charged, a grand jury indicted the fund he founded, saying it had become “a magnet for market cheaters.” The U.S. alleged there had been a “failure by the fund owner and others” at SAC, and described separate insider trading schemes by eight SAC fund managers and analysts.
They include Noah Freeman, Donald Longueuil, Jon Horvath, Wesley Wang, Mathew Martoma, Richard Choo-Beng Lee, Michael Steinberg and Lee. Steinberg and Martoma have pleaded not guilty and both are scheduled to go on trial in November. The others have pleaded guilty and, with the exception of Longueuil, are cooperating with the U.S.
Aggarwal formerly worked at Collins Stewart LLC in San Francisco, said a person familiar with the situation, who requested anonymity because the matter wasn’t public. Andrea Sergautis, a spokeswoman for Canaccord Genuity in Toronto, which acquired Collins Stewart, didn’t respond to a call seeking comment on Aggarwal’s case.
To date, 83 people have been charged by Manhattan U.S. Attorney Preet Bharara’s office with insider trading, with 74 either pleading guilty or being convicted at trial. Eight have pleaded not guilty and are awaiting trial while one man is a fugitive.
Bharara said yesterday Aggarwal is charged with one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud for passing along an inside tip about the Yahoo!-Microsoft venture.
“Aggarwal leveraged his contacts in the technology industry to obtain an illegal edge in the form of inside information about a highly anticipated development, then lied about his criminal conduct,” Bharara said in a statement.
Aggarwal provided material nonpublic information about the companies’ strategic partnership in Internet search and advertising to two different hedge funds, including SAC, the U.S. alleged in a criminal complaint.