Accused tipper to SAC hedge fund arrested in insider-trading probe

Tue Jul 30, 2013 3:24pm EDT
 
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By Emily Flitter and Dan Levine

(Reuters) - A securities analyst accused of leaking secret information in 2009 about a potential partnership between Yahoo and Microsoft to an SAC Capital Advisors hedge fund manager and other traders was arrested and charged in California, prosecutors said on Tuesday.

Sandeep Aggarwal, who worked as an analyst covering technology stocks before moving to India to start his own internet company, was arrested on Monday by FBI agents in San Jose while visiting the United States. He made his initial appearance in San Francisco federal court on Tuesday, charged with conspiracy to commit securities fraud and wire fraud related to insider trading.

Aggarwal, 40, did not enter a plea to allegations that he passed non-public information to about a dozen hedge fund managers including SAC portfolio manager, Richard Lee, who pleaded guilty last week days before the hedge fund itself was indicted on Thursday in New York.

SAC spokesman Jonathan Gasthalter's declined to comment on Tuesday.

The hedge fund and its founder Steven Cohen, one of Wall Street's most successful investors, have been investigated by the FBI and market regulators for about a decade in a crackdown on insider trading.

Aggarwal, wearing jeans and a dark blue short-sleeved polo shirt in court, was ordered released on a $500,000 bond by magistrate judge Nandoor Vadas and told to appear Friday in federal court in New York, where prosecutors have won about 60 insider trading convictions in the past five years.

One of the conditions of Aggarwal's release was that he would have no contact with SAC Capital or with Lee, the former SAC employee he is accused of tipping. Aggarwal is a citizen of India with permanent U.S. residency status.

His lawyer Sanaz Nikaein told the court that her client was planning to cooperate with the FBI after agents first approached him in February and that his arrest had come as "a surprise to his attorney, to his wife and to himself."   Continued...

 
An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut, in this picture taken December 13, 2010. REUTERS/Mike Segar