Danny Kuo, a former analyst charged with participating in a “criminal club” that made almost $62 million using illegal tips to trade in Dell Inc. (DELL:US), pleaded guilty and will cooperate with the government.
Kuo, 36, who worked at Whittier Trust Co., entered his plea today before U.S. District Judge Richard Sullivan in Manhattan.
“I knew what I was doing was wrong,” Kuo told Sullivan at the hearing.
Manhattan U.S. Attorney Preet Bharara said the ring, which allegedly involved five hedge funds and investment firms, is the largest identified by the U.S. to date tied to a single stock. One trade earned a $53 million illegal windfall for Level Global Investors LP’s co-founder, Anthony Chiasson, and the fund, prosecutors said.
Kuo and three other men pleaded not guilty in February to conspiracy and securities fraud charges in federal court in Manhattan. Kuo, who lives in California, pleaded guilty today to securities fraud and conspiracy to commit securities fraud.
Bharara called the group “a criminal club, whose purpose was profit and whose members regularly bartered lucrative inside information.”
Kuo obtained inside information about Nvidia Corp. (NVDA:US) ahead of the company’s earnings announcements and then passed the information to the group and his portfolio manager, the U.S. Attorney’s Office said. He also obtained inside information about Dell, which he shared with the portfolio manager, according to the government. Kuo also traded for his own account, he said at the hearing.
The three who pleaded not guilty in February are Chiasson; Todd Newman, a portfolio manager formerly at Diamondback Capital Management LLC; and Jon Horvath, an analyst at the hedge fund Sigma Capital Management LLC. Three other men pleaded guilty and are cooperating with the government.
The case is U.S. v. Newman, 12-cr-121, U.S. District Court, Southern District of New York (Manhattan).
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