WASHINGTON/NEW YORK Level Global Investors LP agreed to pay $21.5 million to settle U.S. Securities and Exchange Commission civil charges that its co-founder and an analyst engaged in insider trading, in a case that caused the demise of the hedge fund firm.
The case against Level Global, which once invested $4 billion, arose from allegations that co-founder Anthony Chiasson and analyst Spyridon "Sam" Adondakis engaged in repeated illegal trading in computer maker Dell Inc and chipmaker Nvidia Corp shares in 2008 and 2009.
It is part of the broader government probe into alleged insider trading that was unveiled in 2009, and which has led to several dozen convictions and guilty pleas.
A federal jury in Manhattan convicted Chiasson on securities fraud and conspiracy counts in December, and he faces sentencing on May 13. Adondakis pleaded guilty in January 2012 and testified against his former boss.
"The insider trading at Level Global was hardly an isolated event - it occurred repeatedly, and involved multiple companies and multiple quarterly announcements," Sanjay Wadhwa, senior associate director of the SEC's regional office in New York, said in a statement.
Monday's settlement calls for Level Global to give up $10.08 million of fees linked to the alleged scheme, pay a $10.08 million fine and pay $1.35 million in interest.
Level Global neither admitted nor denied the charges, and the settlement requires court approval.
Lawyers for Level Global did not immediately respond to a request for comment.
Level Global closed in 2011 after an FBI raid, and the Greenwich, Connecticut-based firm is winding down its business.
Todd Newman, a former portfolio manager at Diamondback Capital Management, was also convicted of insider trading at the same trial as Chiasson. Newman faces a May 2 sentencing, and Diamondback in December announced its own plan to close.
The SEC said its civil case against Chiasson is continuing. Adondakis has settled with the regulator.
The case is SEC v. Adondakis et al, U.S. District Court, Southern District of New York, No. 12-00409.
(Reporting by Sarah N. Lynch in Washington, D.C. and Jonathan Stempel in New York; Editing by Gary Hill and Chris Reese)