NEW YORK (AP) -- Two former hedge fund managers were convicted Monday of insider trading charges, including allegations that one of them had made as much as $50 million on a tip about Dell earnings.
Todd Newman and Anthony Chiasson were convicted in federal court in Manhattan after a five-week trial that included testimony from two analysts for the men. The jury reached its verdict after two days of deliberations.
Newman, of Needham, Mass., is a former portfolio manager with Stamford, Conn.-based Diamondback Capital Management who had been accused of making about $2.8 million from illegal tips.
Chiasson, of Manhattan, is a co-founder of Greenwich, Conn.-based Level Global Investors. The government said he earned about $50 million illegally by trading on a tip received about Dell Inc. stock in 2008.
The men denied insider trading, and their lawyers argued that they believed they were basing trades on legitimate research.
The verdict raised the number of convictions in the government's five-year crackdown on insider trading to 71.
In a release, U.S. Attorney Preet Bharara said the men "join the ranks of high-level investment fund managers who are being made to answer for their extraordinarily bad risk-reward analysis about what is right and what is wrong."
"Like scores of privileged professionals before them, Newman and Chiasson are finding out the hard way that the opportunity cost of gaining an illegal edge in the market is the loss of one's liberty," he added.
Sentencing was set for April 19 for both men. Defense lawyers said they would appeal the verdict.
When the men were arrested in January, the government said the Dell trades represented the largest insider trading transaction ever prosecuted in Manhattan. Prosecutors said it was part of a $78 million scheme involving at least seven financial industry professionals.
Nearly $62 million of the $78 million resulted from tips provided by a Dell employee to a former Dell worker who spread the information among friends, some of whom worked at five investment houses, including three hedge funds. Authorities said another $15.7 million was earned in 2008 and 2009 on trades involving visual computing technology company Nvidia Corp.
Since the trial began, the government has arrested a former hedge fund portfolio manager accused of enabling a quarter of a billion dollars in profits to be made illegally by passing along insider information about the results of tests on an Alzheimer's disease drug that was being prepared for market.