Ex-fund manager sentenced to prison for insider trading
By Bernard Vaughan
NEW YORK (Reuters) - Former Diamondback Capital Management portfolio manager Todd Newman was sentenced to 4-1/2 years in prison on Thursday for insider trading in the stock of Dell Inc DELL.O and Nvidia Corp (NVDA.O: Quote).
U.S. District Judge Richard Sullivan also ordered Newman, 48, to forfeit $737,724 and to pay a $1 million fine.
Sullivan called Newman a "decent" man and said it "breaks my heart" to have read letters about the impact his incarceration could have on his 12-year-old daughter, but that a stiff penalty was warranted.
"This is a serious crime," Sullivan said, before delivering his sentence in U.S. District Court in Manhattan. "This is a crime that does have an impact across an economy and across a society."
Sullivan reserved judgment on whether Diamondback should receive restitution as a victim of Newman's crimes. Prosecutors had requested Newman reimburse Diamondback as much as $12.9 million.
The firm, which closed in December, was seeking $39 million to recoup costs from its ties to the investigation, which caused clients to withdraw nearly three-fourths of the more than $5 billion of assets it once managed. The firm also previously agreed to pay $9 million to settle civil charges.
But Sullivan asked if it was "kind of perverse" to consider Diamondback a victim.
Diamondback should have prevented the trades from happening, and conceivably could have been charged, he said. And it could discourage firms from imposing strict compliance procedures, allowing them to either profit from undetected insider trading or seek restitution from traders when they are caught. Continued...