U.S. securities regulators have settled with one of the hedge fund firms accused of participating in an insider trading scheme last week.
The U.S. Securities and Exchange Commission said Monday that Diamondback Capital Management LLC has agreed to pay more than US$9 million to settle insider trading charges brought against it by the SEC last week. Under the proposed settlement, Diamondback will give up more than US$6 million of allegedly ill-gotten gains and pay a US$3 million civil penalty. It also consented to a judgment that permanently enjoins it from future violations of federal anti-fraud laws.
The proposed settlement, which is subject to court approval, would resolve charges of insider trading by Diamondback in shares of Dell Inc. and Nvidia Corp. in 2008 and 2009. Last week, the SEC filed insider trading charges against Diamondback, along with another hedge fund advisory firm, and seven individuals, including a former analyst and portfolio manager at Diamondback.
In reaching the proposed settlement, the SEC says it considered the substantial cooperation that Diamondback provided. The hedge fund firm also submitted a statement of facts to the SEC and federal prosecutors, and entered into a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York.
“We are pleased to have reached a prompt resolution of the charges against Diamondback,” said George Canellos, director of the SEC’s New York Regional Office. “If approved by the court, we believe that the proposed settlement appropriately sanctions the misconduct while giving due credit to Diamondback for its substantial assistance in the government’s investigation and the pending actions against former employees and their co-defendants.”