NEW YORK/BOSTON (Reuters) - Money manager Ameriprise Financial would seem to have little in common with closely held investment advisory firms like Friess Associates and Sonar Capital Management or a giant hedge fund like Citadel Group.
Yet a Portland, Oregon-based technology analyst under scrutiny in a U.S. insider trading probe included employees of all three firms in an unusual email he sent in late October, according to information reviewed by Reuters.
The research analyst, John Kinnucan, told an eclectic list of industry contacts that two agents with the Federal Bureau of Investigation had recently visited him in connection with the investigation.
In the email, sent to more than 50 people associated with some 20 hedge funds and mutual funds, Kinnucan said he had rebuffed a demand by the FBI that he cooperate with the inquiry and secretly record conversations with a client, said people familiar with the situation.
The names of many of the recipients of the email were disclosed to Reuters by a source who had a copy of the email. They were confirmed by another person who also has seen a copy of the email.
The email, first reported by the Wall Street Journal on November 19, has elevated Kinnucan, the principal of Broadband Research, a small independent research firm, into something of a minor celebrity in financial circles and suggests that federal authorities believe the misuse of confidential information is widespread on Wall Street.
Over the past two weeks, Kinnucan, who did not return phone calls, has appeared on television channel CNBC and penned an essay for The New York Times’ Dealbook blog to explain why he refused to “wear a wire.” In his Dealbook op-ed piece, Kinnucan accused federal authorities of seeking to “criminalize what has been common practice for years.”
JUDGMENT AT ISSUE
Kinnucan’s email, which included the names of industry contacts and their company email addresses, has unnerved many on Wall Street. There is a fear that by simply being a recipient on the email, federal authorities may take notice and come visit these contacts too.
Employees of Ameriprise, Delaware-based Friess Associates and Boston-based Sonar Capital and MFS Investment Management, were some of the recipients of the Kinnucan email. Some of the better-known hedge funds -- Coatue Management, Citadel, SAC Capital Advisors and Maverick Capital -- also employ analysts and traders who received the email.
Officials for a few of the funds said that Kinnucan, in disclosing the identity of his clients, may have violated an expectation of privacy that traders and analysts had when they signed up with him. One person, who did not want to be identified, said Kinnucan may not have “exercised the best judgment” in identifying his contacts on the email.
An spokesman for Minneapolis-based Ameriprise, which sells insurance but has been expanding its advisory and wealth management business, did not return a phone call seeking comment. One of the Ameriprise portfolio managers who received the email said, “I’m sorry, I can’t comment.”
An official with Friess Associates also declined to comment. The founder of Sonar Capital did not return phone calls. A lawyer for Coatue also did not return phone calls.
Over the past two few weeks, a handful of Kinnucan’s current or former clients, including SAC Capital and mutual funds Janus Capital Group and Wellington Management, have received either subpoenas or requests for information from federal prosecutors, according to investor letters or public statements by the funds. People familiar with the situation said Citadel also received a subpoena from U.S. authorities.
Another former Kinnucan client, David Ganek’s Level Global Trading, had its office raided by the FBI on November 22.
Level Global has told its investors the fund is not the “target” of the investigation. Janus on Thursday issued a statement saying it too is not a “target” of the investigation. Wellington and SAC Capital have told investors they are cooperating with the information requests. A Citadel spokeswoman declined to comment.
A person familiar with Maverick said the hedge fund had not received a subpoena. An MFS spokesman said no one at the firm or any employee has been contacted by the government.
Federal authorities have declined to comment on the investigation. But representatives for some of Kinnucan’s industry contacts who have not yet been served with subpoenas privately said they are worried.
In some cases, the Kinnucan email was sent to several people at a firm or fund. For instance, eight people at Ameriprise received the email and at Citadel there were seven recipients, sources said.
Kinnucan sent his email to at least three people at Level Global, one of three hedge funds raided by the FBI. One of the recipients was Anthony Chiasson, one of the fund’s founding partners and a director of research.
Additional reporting by Ross Kerber; Editing by Steve Orlofsky
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