Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Regulation Daily, March 13, 2014

SEC files another insider trading case related to S.A.C. Capital

By Matthew Garza, J.D.

Ronald N. Dennis, a former analyst at CR Intrinsic Investors, an affiliate of hedge fund advisory firm S.A.C. Capital Advisors, will pay more than $200,000 to settle insider trading charges filed by the SEC today in the Southern District of New York. The SEC charged Dennis with trading on material nonpublic information in advance of announcements by Foundry Networks and Dell that resulted in $3.8 million in profits and avoided losses at CR Intrinsic and S.A.C. Capital, which recently changed its name to Point72 Asset Management (SEC v. Ronald N. Dennis, March 13, 2014).

Foundry. The complaint alleged that an insider at Foundry Networks passed information about a pending acquisition to a friend of Dennis named Matthew Teeple in July 2008. Teeple, a San Francisco-based analyst, passed the information to Dennis, who in turn passed the information to his supervisor at CR Intrinsic. CR Intrinsic then purchased 120,000 shares of Foundry stock on behalf of a hedge fund it managed, generating more than $550,000 in profits.

Dell. The complaint further alleged that an insider at Dell passed quarterly earnings information and other performance data to New York analyst and former Dell employee Sandeep Goyal in 2008 and 2009, who passed the information to an analyst at Diamondback Capital Management named Jesse Tortora. Tortora shared this information with Dennis, who again passed the information to portfolio managers at CR Intrinsic, leading to trading that made the fund millions.

The SEC’s complaint against Dennis detailed meetings, phone calls, and instant messages between the group of analysts. After short sales tied to one of the Dell communications produced an $80,000 profit, Tortora sent an instant message to Dennis saying, “your [sic] welcome.” Dennis responded “you da man!!! I owe you.”

Dennis was charged with violations of Exchange Act Sec. 10(b) and Rule 10b-5, and Securities Act Sec. 17(a). He will pay $95,000 in disgorgement, $12,600 in prejudgment interest, and a $95,000 penalty to settle the charges, without admitting or denying the allegations. He will be enjoined permanently from future violations of the securities laws. The SEC said he will also be barred from associating with an investment adviser, broker, dealer, municipal securities dealer, or transfer agent in a related administrative proceeding.

“Like several others before him at S.A.C. 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,” said Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office. “His actions have cost him the privilege of working in the hedge fund industry ever again.”

Tortora and Diamondback were charged in 2012 along with several other hedge fund managers and analysts as part of an SEC investigation into expert networks and hedge fund trading activities. The San Francisco-based analyst, Matthew Teeple, and two others were charged last year for insider trading in Foundry stock.

The case is No. 14 CV 1746.

Companies: CR Intrinsic Investors, LLC; S.A.C. Capital Advisors, LLC; Foundry Networks, Inc.; Dell, Inc.; Point72 Asset Management

MainStory: TopStory Enforcement FraudManipulation CaliforniaNews NewYorkNews

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.