The US Securities and Exchange Commission (SEC) has charged a former portfolio manager at SAC Capital Advisors with insider trading ahead of major announcements by technology companies.
The SEC alleges that Richard Lee’s illegal trading based on nonpublic information he received from sources with connections to insiders at the technology companies enabled the SAC Capital hedge fund that he managed to generate more than US$1.5 million in illegal profits.
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Lee also made trades in his personal account. The insider trading occurred ahead of public announcements about a Microsoft-Yahoo partnership and the acquisition of 3Com Corporation by Hewlett-Packard.
"Lee’s illegal trading is yet another byproduct of a pervasive, win-at-all-cost culture that will not be tolerated," said George Canellos, co-director of the SEC’s Division of Enforcement. "Lee cultivated and used sources in the U.S. and China to gain an unfair trading edge that landed him in law enforcement’s crosshairs."
According to the SEC’s complaint filed in US District Court for the Southern District of New York, Lee received inside information in July 2009 from a sell-side analyst familiar with nonpublic negotiations between Microsoft and Yahoo to enter into an Internet search engine partnership.
The SEC further alleges that Lee received highly confidential information about 3Com from a Beijing-based consultant who he knew had close personal ties with executives at the company.
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By GlobalDataThe SEC’s complaint charges Lee, who lives in Chicago, with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks a final judgment ordering Lee to pay disgorgement of his ill-gotten gains plus prejudgment interest and financial penalties, and permanently enjoining him from future violations of these provisions of the federal securities laws.
