Insider Trading Continued (and to be continued)


New York – Developments don’t stop in the insider-trading cases started by Preet Bharara, U.S Attorney for the Southern District of New York.

Today, Don Ching Trang Chu, an expert consultant to hedge funds who worked for Primary Global Research, is expected to plead not guilty to insider-trading charges and waive his right to be indicted by a U.S grand jury. Bloomberg reported that federal defendants traditionally waive their right to be indicted by a grand jury as a prelude to entering into an agreement with prosecutors and plead guilty.

Also today, Donald Longueuil, a former hedge fund manager with SAC Capital advisors, pled guilty to insider-trading charges. So far four of 12 people charged in the probe have pleaded guilty.

Pleading guilty of insider-trading charges has a well known history. Noah Freeman, A friend of Longueuil’s and also a former SAC manager, secretly made a deal with prosecutors to plead guilty and cooperate with the investigators. His cooperation led to the charges against Longueuil after he was taped describing how he destroyed evidence of alleged insider-trading.

Is it possible that Longueuil’s plead is similar to Freeman’s and he will eventually cooperate with the investigation bringing some of his own friends to justice? Is it possible that Chu is paving his way into pleading guilty and subsequently cooperating with the investigators releasing names of other fund managers involved in insider-trading?

Time will reveal more clearly what exactly is the strategy of these two defendants who have the potential of being extremely valuable to the investigators if they decide to cooperate. For now, only one thing is clear: if Chu, Longueuil, or Freeman for that matter, are feeling like giving their friends a call to have a nice chat, it might not go beyond observations about the weather, particularly if those friends used to occupy the office desk next door.


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