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US stock market daily report (March 14, 2014, Friday)

March 17, 2014, Monday, 05:46 GMT | 02:46 EST | 11:16 IST | 13:46 SGT
Contributed by Millennium Traders


A former analyst with an affiliate of hedge fund advisory firm SAC Capital Advisors, Ronald N. Dennis from Fort Worth, Texas, has been charged by the Securities and Exchange Commission with insider trading based on nonpublic information Dennis obtained about a pair of technology companies. Per the complaint from the SEC, filed in federal court in Manhattan, NY, Dennis received illegal tips about Dell’s financial performance from Jesse Tortora, who was then an analyst at Diamondback Capital.

Dennis, per the SEC, allegedly got illegal tips from two fellow hedge fund analysts including confidential details about impending announcements at Dell Inc. and Foundry Networks. Dennis prompted illegal trades in Dell and Foundry stock which resulted in hedge funds managed by SAC and affiliate CR Intrinsic Investors to generate illegal profits and avoid significant losses.

SEC alleges that, based on nonpublic information Dennis received about Dell in advance of at least two quarterly earnings announcements in 2008 and 2009, CR Intrinsic and SAC made trades on Dell. This insider trading trail runs deep. A Dell insider shared information with a friend, who shared the insider information with Tortora who in turn, released the confidential information to Dennis. The illegal insider trading initiated by Dennis resulted in nearly $3.2 million in profits by hedge funds managed by CR Intrinsic and SAC. Within minutes after one of the announcements from Dell, Tortora sent an instant message to Dennis saying “your welcome,” resulting in a response from Dennis “you da man!!! I owe you.”

Additional allegations by the SEC in the complaint include that, during July 2008 Dennis was informed by Teeple about Foundry’s impending acquisition by another technology company. As a result, Dennis caused a CR Intrinsic hedge fund to purchase Foundry stock shortly thereafter which resulted in profits of nearly $550,000 when the news was made public.

Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office said, “Like several others before him at SAC Capital and its affiliates, Dennis violated the insider trading laws when he exploited confidential information about public companies, in this case Dell and Foundry, to unjustly benefit the firms and enrich himself. His actions have cost him the privilege of working in the hedge fund industry ever again.”

SEC complaint against Dennis charges him with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 and Section 17(a) of the Securities Act of 1933. Dennis has agreed to be permanently barred from the securities industry as well as being barred from associating with a broker, dealer, investment adviser, municipal securities dealer or transfer agent in a related administrative proceeding. Without admitting or denying the allegations, Dennis will pay over $200,000 to settle the SEC’s charges which consist of: $95,351 in disgorgement, $12,632.34 in prejudgment interest and a $95,351 penalty.

Per a memo to employees from Thomas Conheeney, President of SAC Capital Advisors LP, Steven A. Cohen is changing the name of SAC Capital Advisors LP to Point72 Asset Management, in April. To settle U.S. allegations of insider trading, SAC hedge-fund must cease to manage clients money. The new company name refers to the address for headquarters of SAC located at 72 Cummings Point Road in Stamford, Connecticut. The firm will manage Cohen billion dollar fortune.

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