October 16, 2014 / 8:56 PM / 5 years ago

Hedge fund analyst gets five years in U.S. prison for insider trading scheme

NEW YORK (Reuters) - A former analyst at a San Francisco hedge fund who prosecutors say engaged in an “unparalleled” spree of tipping inside information he obtained from an executive at Foundry Networks Inc was sentenced on Thursday to five years in prison.

Former hedge fund analyst Matthew Teeple arrives to the Manhattan Federal Courthouse in downtown Manhattan, New York, October 16, 2014. REUTERS/Eduardo Munoz

Matthew Teeple, the former Artis Capital Management analyst, was also ordered by U.S. District Judge Robert Patterson in Manhattan to pay $653,890 in fines and forfeitures for his role in a conspiracy that prosecutors say enabled the hedge fund to earn more than $36 million.

“I’m deeply apologetic to all those impacted by my actions,” Teeple said.

The proceedings came two weeks after a federal jury found David Riley, the ex-Foundry executive, guilty of two counts of securities fraud and one conspiracy count for providing inside information to Teeple.

Those tips, prosecutors said, included news that Foundry in 2008 would be acquired by Brocade Communications Systems Inc for $3 billion. Trading ahead of the announcement allowed Artis Capital to make $20 million, prosecutors said.

The two men are among 83 individuals convicted over the last five years amid a campaign against insider trading by the office of Manhattan U.S. Attorney Preet Bharara.

Prosecutors sought a sentence of five years in prison for Teeple, 43, who pleaded guilty in May ahead of trial to a single count of conspiracy to commit securities fraud.

From 2005 to 2009, prosecutors said Teeple engaged in a scheme to obtain tips from Riley, then Foundry’s chief information officer, first while employed at a consulting service and later while at Artis.

Prosecutors said tips from Riley to Teeple about Foundry’s sales gave Artis an “inside edge” ahead of its quarterly results announcements.

Teeple not only told Artis employees about the Brocade tip, but gave the information to friends, colleagues and contacts, prosecutors said, calling his tipping spree “unparalleled in the recent spate of insider trading prosecutions.”

In the case of the Brocade merger, Teeple told 15 people alone the same day Riley allegedly tipped him about it, prosecutors said.

“He was a shotgun, firing information out to multiple people,” Telemachus Kasulis, an assistant U.S. attorney, said during the sentencing.

At Artis, which then had about $2 billion under management, large trades in Foundry from 2007 to 2008 repeatedly came after Teeple spoke with Stuart Peterson, its founder, or Michael Harden, a senior analyst, prosecutors said.

Neither individual was ever charged. Peterson in 2013 spit the advisory business and formed a new firm, Artis Ventures Management, focused on venture capital. Peterson and Harden did not respond to requests for comment.

Riley, 48, is scheduled to be sentenced Feb. 6. His lawyer has promised an appeal.

The case is U.S. v. Teeple, U.S. District Court, Southern District of New York, No. 13-cr-00339.

Reporting by Nate Raymond in New York; Editing by Cynthia Osterman

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below