Police say a London trader has pleaded guilty to setting up a Ponzi scheme that defrauded investors out of 14 million pounds ($21.8 million.)

Former GFX Capital director Terry Freeman, 61, admitted to fraudulent trading and a string of other offenses, police said in a statement Wednesday. Two of the charges are related to conducting business while leading a bankrupt company.

Police say Freeman promised investors no risks and high returns on the foreign exchange markets. Instead, he used their money to pay for holiday homes in Cyprus and France and gifts for his wife — including a 120,000 pound ($187,000) diamond ring.

Freeman, who was arrested in February 2009, appeared at London’s Southwark Crown Court. He will be sentenced next month.

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers

The U.S. Securities and Exchange Commission renewed its demand that Galleon Group co-founder Raj Rajaratnam turn over wiretaps recorded by the Justice Department, before a criminal trial set to begin next month.

The SEC, which has charged Galleon, Rajaratnam and others with insider trading in a civil enforcement action, claimed in papers filed late yesterday in federal court in New York that it needs access to the wiretaps to prepare its case.

“There is no telling how much additional material will be contained on the intercepts that warrants follow-up by the SEC,” the agency claimed.

The SEC request follows a ruling by U.S. District Judge Richard J. Holwell in November that prosecutors hadn’t violated the law in wiretapping Rajaratnam and Danielle Chiesi, a former hedge fund consultant charged along with him. Rajaratnam has offered to produce relevant wiretaps after the conclusion of his trial.

Rajaratnam and Chiesi were charged in October 2009 with using tips from company insiders to make $52 million in illegal trades. The case is built on government wiretaps of 18,150 communications and the testimony of witnesses who have agreed to cooperate with the prosecution.

Rajaratnam claims that only 240 of the wiretapped communications are relevant to the SEC case, the agency said in its papers. He argued in court papers that the SEC won’t be harmed by waiting until after his trial, and releasing the wiretaps earlier threatens his privacy and that of others.

Jim McCarthy, a spokesman for Rajaratnam, had no immediate comment on the SEC demand.

Order Overturned

Last year, U.S. District Judge Jed S. Rakoff, who is presiding over the SEC case, ordered Rajaratnam and Chiesi to turn over the wiretaps they were given by prosecutors. A federal appeals court overturned the ruling in September, saying that Rakoff should have waited for Holwell’s decision on the legality of the wiretaps.

Prosecutors said they lack the legal authority to provide the wiretaps directly to the SEC, according to the appeals court.

The criminal case is U.S. v. Rajaratnam, 1:09-cr-1184; the civil case is SEC v. Galleon Management LP, 09-cv-08811, U.S. District Court, Southern District of New York Manhattan)

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers

Winifred Jiau, a former Primary Global Research LLC consultant arrested in a U.S. Justice Department insider-trading probe, will be transferred to federal court in New York from San Francisco to face charges.

U.S. Magistrate Judge Bernard Zimmerman in San Francisco today ordered Jiau to be transported “forthwith” to face charges by federal prosecutors in New York that she sold information about Nvidia Corp. and Marvell Technology Group Ltd. to portfolio managers at three unidentified hedge funds through Primary Global. Jiau didn’t contest the transfer.

Jiau’s preliminary hearing in federal court in Manhattan will be delayed 30 days to give her attorney time to prepare, Zimmerman said. Today’s hearing in Zimmerman’s court lasted less than two minutes.

Jiau, who was arrested Dec. 28, has been in custody in Dublin, California, after Zimmerman said there was a risk she would flee if released on bail.

She faces one count each of conspiracy to commit securities fraud and securities fraud. Under sentencing guidelines, she may be imprisoned for 51 months to 63 months if convicted, Assistant U.S. Attorney Wilson Leung said Jan. 3. Leung said then that prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan intended to indict her “shortly.”

Jiau intends to plead not guilty, her attorney, Mark Goldrosen, said yesterday.

The U.S. insider-trading probe became public in 2009 with the arrest of Galleon Group LLC hedge fund co-founder Raj Rajaratnam, who denies the charges against him and is scheduled to go on trial in Manhattan on Feb. 28.

At least 16 people have pleaded guilty out of about two dozen arrests in the Galleon probe. The crackdown widened late last year with the arrest of workers at technology firms and Primary Global.

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers

Bob Nguyen, a former analyst for expert-networking firm Primary Global Research LLC, pleaded guilty today in Manhattan federal court in the latest case brought as part of a nationwide U.S. insider-trading probe.

Nguyen, 32, of Stockton, California, admitted he was part of a scheme at his firm to provide hedge fund clients with material, non-public information. Nguyen, whose cooperation may help prosecutors convict other defendants, is the latest person tied to Primary Global to be implicated in the U.S. insider- trading probe.

Expert-networking companies such as Mountain View, California-based Primary Global match investors with specialists who provide insight into specific markets. Nguyen told U.S. Magistrate Judge Debra Freeman today that he recruited employees of public companies as consultants who were paid on an hourly basis to hold calls with Primary Global clients, who in turn paid the firm for the inside information.

“I myself obtained material nonpublic information from PGR experts, often over the telephone, and then passed that information to PGR clients, directly and indirectly through other PGR employees by e-mail or telephone,” Nguyen said. “I knew that certain PGR experts were providing material nonpublic information about their companies directly to PGR clients.”

The clients were “money managers, including hedge funds,” many of them based in New York, who sought the insiders’ tips “for the purpose of executing securities transactions,” Nguyen said.

Revenues, Supplies

Prodded by Freeman to say whether Primary Global employees knowingly engaged in a conspiracy or worked independently, Nguyen said he and other firm employees had an agreement to provide non-public information, such as “revenues, supplies and clients,” to hedge-fund employees who traded on it.

Nguyen pleaded guilty to conspiracy and fraud in a case being prosecuted by the office of Manhattan U.S. Attorney Preet Bharara. He faces as long as 20 years in prison on the most serious charge when he is sentenced by U.S. District Judge Victor Marrero.

Assistant Manhattan U.S. Attorney Antonia Apps today described Nguyen in court as “a cooperating witness with the government.” In a plea agreement Nguyen signed last month with the U.S., he promises to continue to provide information to prosecutors in exchange for a lenient sentence.

Remains Free

After he entered his guilty plea, Nguyen was allowed to remain free on his own recognizance, surrendered his passport and was told by Freeman not to leave the continental U.S. No sentencing date was set. The magistrate directed that he return to court on April 11.

Both Nguyen and his lawyer, Susan Cassell, declined to comment after court.

Nguyen, who said he worked at Primary Global between January 2008 and February 2010, was a semiconductor vertical manager doing research in semiconductor stocks, according to the company’s website. Before joining the company, he did marketing for power products at National Semiconductor Corp., according to a posting on Primary Global’s website.

He said in court today that he knew he was breaking the law because he had previously worked at a public company where employees were barred from disclosing material, non-public information.

“I knew from my past experience as an employee of a public company that employees of companies are prohibited from disclosing confidential information,” he said. “I also soon realized that by providing material, non-public information to PGR clients, they were violating their duties owed to their companies to keep that information confidential.”

Blog Entries

Archives on the Primary Global website show that Nguyen wrote frequently, posting blog entries about technology products such Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerry “Storm” as recently as December 2009.

Winifred Jiau, a former consultant for Primary Global who was also charged by Bharara’s office in the case last month, intends to plead not guilty, her lawyer Mark Goldrosen said today.

Jiau, who is in custody in federal jail in Dublin, California, after a judge said she was a flight risk, was arrested Dec. 28 and accused of selling information about Nvidia Corp. and Marvell Technology Group Ltd. to portfolio managers at three unidentified hedge funds through Primary Global.

Two other former Primary Global employees, Don Ching Trang Chu, and James Fleishman, also have been criminally charged.

‘CW-4’

Prosecutors on Dec. 16 announced insider trading charges against Fleishman and four Primary Global experts who worked at technology firms including Dell Inc. The complaint in that case doesn’t name Nguyen, though it does say that five people are cooperating with the U.S. probe. Among them is a Primary Global semiconductor vertical manager identified as “CW-4.”

Cassell and Ellen Davis, a spokeswoman for Bharara, declined to comment when asked if Nguyen was CW-4.

Two other people pleaded guilty last month in the case. On Dec. 14, Karl Motey, an independent consultant in California, pleaded guilty and agreed to cooperate with the U.S. in the insider trading probe.

Daniel DeVore, a former a global supply manager at Dell, pleaded guilty on Dec. 10 and also is cooperating with the U.S. In his guilty plea, DeVore said he worked as a paid consultant for Primary Global from late 2007 to August 2010 and, through the firm, accepted money from hedge funds for inside information.

Rajaratnam Arrest

The insider-trading probe became public in 2009 with the arrest of Galleon Group LLC hedge fund co-founder Raj Rajaratnam, who denies the charges against him and is scheduled to go on trial in Manhattan on Feb. 28.

At least 16 people have pleaded guilty out of about two dozen arrests in the probe. The crackdown widened late last year with the arrest of workers at technology firms and of employees at an expert-networking firm.

The expert-network arm of the Galleon probe was revealed with the execution of search warrants at three hedge funds in New York and Boston on Nov. 22.

The case is U.S. v. Bob Nguyen, U.S. District Court, Southern District of New York (Manhattan).

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers

The family friend of Danielle Chiesi who allegedly supplied her with inside information about Akamai Technologies Inc. was identified in court papers as the company’s former senior marketing director, Kieran Taylor.

Taylor is the unidentified “Akamai source” in a U.S. Securities and Exchange Commission complaint filed against New York-based Galleon Group in the biggest hedge-fund insider trading investigation in history, according to court papers filed by the agency last week.

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Taylor, who hasn’t been sued by the SEC or charged criminally, gave profitable, advance information to Chiesi about Akamai’s lower-than-expected earnings for the second quarter of 2008, the SEC said. Chiesi traded on the tips and passed them to others in the case, including Galleon co-founder and Chief Executive Officer Raj Rajaratnam, according to the SEC.

Chiesi, according to the SEC complaint, used Taylor’s information to make about $2.4 million through short sales of the company’s stock for New Castle Funds LLC, where she was employed as a consultant. Akamai’s share price declined almost 20 percent after the earnings were made public.

Taylor didn’t return a voice-mail message seeking comment yesterday.

“He’s no longer an employee with Akamai,” said Jeff Young, a company spokesman.

Taylor Profile

A profile for a Kieran Taylor posted on the business- networking site LinkedIn says that Taylor worked at Akamai from January 1999 to May 2010.

Chiesi, in addition to trading on the Taylor tips for New Castle, passed the information to Rajaratnam and to Steven Fortuna, cofounder of S2 Capital Management LP, who is cooperating with prosecutors, according to the SEC complaint. Rajaratnam made more than $3.2 million trading on the information for Galleon, the SEC said. Fortuna made about $2.4 million for S2 Capital Management, the SEC said.

Rajaratnam and Chiesi have pleaded not guilty to criminal insider trading charges.

The SEC identified Taylor in answers to questions submitted in its civil case by the defendants.

The criminal case is U.S. v. Rajaratnam, 1:09-cr-1184; the civil case is SEC v. Galleon Management LP, 09-cv-08811, U.S. District Court, Southern District of New York Manhattan).

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers

January 15th, 2011

CHP Registration Opens For Spring 2011 Session

On Saturday January 15th, 2011 the Certified Hedge Fund Professional (CHP) designation program will open for registration to a limited group of just 200 additional participants.

The CHP designation is the industry standard #1 most popular hedge fund training and certification program that is provided for and by hedge fund professionals. The CHP program is provided by the 40,000 member Hedge Fund Group (HFG), the largest and most well known networking association in the hedge fund industry.

Since the CHP program is provided 100% online you can complete it along with the examination from anywhere in the world as long as you have a secure and consistent internet connection.

Here are three pages of our site to help you learn more about the program:

1) Our Job Placement Services for CHP Participants: http://hedgefundcertification.com/Hedge-Fund-Jobs.html

2) Our Benefits Page: http://hedgefundcertification.com/Benefits.html

3) Our 220+ Participant Quotes Page: http://hedgefundcertification.com/Quotes.html

If you have any questions at all about registration, tuition, or how the program works please see our very detailed website at ttp://HedgeFundCertification.com, or you may reach us at (212) 729-5067 or by email at team@hedgefundcertification.com.

- Richard

Richard Wilson
(212) 729-5067
Hedge Fund Group (HFG)
http://HedgeFundCertification.com

“The CHP designation is a great program to educate new employees who and join our hedge fund down the road.”

- Tom Jordan, President of TCJ Capital

“The CHP curriculum is a great place for people within or entering the industry to gain a fundamental foundation on the history, structure, and concept of the Hedge Fund Industry with freedom of time allocation and limited cost.”

- Jeffrey Ziglar | Vice President of Hedge Fund Strategies at Goldman Sachs and Co.

“The course subjects allows you to develop an in-depth understanding of the portfolio analytics methods and measures which are constantly evolving. The organizers were able to accommodate to my unique request and prompt to resolve issues encountered.”

- Majieb Zain | Trader at Barclays Bank Plc

Securities and Exchange Commission members are struggling to reach agreement on a study examining whether the regulator should outsource oversight of investment advisers to an industry body, people familiar with the matter said.

Depending on its conclusions, the study could lay the groundwork for merging the supervision of thousands of SEC-registered advisers into the Financial Industry Regulatory Authority, the private agency that already polices brokers.

Investment advisers, including hedge-fund managers, are battling to ensure that doesn’t happen, even offering to pay fees to the SEC so the regulator can step up adviser inspections.

Finra, meanwhile, says oversight would be improved under a private agency and has hinted strongly it wants the job.

The study, which was mandated by the Dodd-Frank financial law passed in July, must be completed by next week. Commissioner Elisse Walter, who served as a Finra executive before coming to the SEC in 2008, wants the SEC to recommend that Congress let it tap an outside body to supervise advisers, people familiar with the matter said.

Luis Aguilar, who like Ms. Walter was appointed by a Democrat, is staunchly opposed to such a move. In a 2009 speech, he said it would amount to outsourcing the SEC’s regulatory mission and would be more costly than increasing the SEC’s resources to oversee advisers.

The SEC’s challenge is drafting a study that can garner the votes of at least three commissioners so it can be released to Congress, as mandated by the Dodd-Frank law. Chairman Mary Schapiro, who headed Finra before taking over the SEC, has recused herself from the vote.

The study comes as the SEC is facing severe budget strains. The agency was assigned wider responsibilities by the Dodd-Frank law, including new powers to oversee derivatives dealers and hedge-fund advisers. But Congress hasn’t increased its budget. Republicans, now in control of the House, may be keener to lighten the SEC’s regulatory load than to increase its funding.

Groups representing investment advisers, hedge-fund managers, accountants, mutual-fund companies and state securities regulators in letters to the SEC have weighed in against shifting adviser oversight to a private agency. They say the model of industry self-policing is plagued by conflicts and lacks accountability to the public.

Rather than one recommendation, the SEC may present a series of options to Congress for beefing up adviser oversight, people involved in the negotiations said. The options might include handing the job to a private agency or allowing the SEC to charge advisers fees to regulate the industry, they said. Another option would be to tap a private agency to police firms registered as both brokers and advisers, leaving all other advisers to the SEC. But that would leave the SEC with no firsthand knowledge of some of the biggest Wall Street players, one SEC official argued.

The American Institute of Certified Public Accountants suggested Finra has a perfunctory approach to enforcement and might display bias against investment advisers during exams. Finra Chief Executive Richard Ketchum said in an interview that Finra was qualified to perform oversight of investment advisers. He disputed that the agency was conflicted, saying it operates “walled off” from the securities industry. A majority of its board members have no affiliation with the industry, he said.

Both the SEC and Finra have been faulted for missing Bernard Madoff’s giant Ponzi scheme. The Madoff firm was registered with the SEC and Finra.

Finra is unlikely to be named in the SEC study, people familiar with the matter said. But the agency, which oversees more than 4,500 brokerage firms, is seen as the only outside body with the money and structure in place to step into an adviser-oversight role.

Finra, in a Nov. 2 letter to the SEC, argued the SEC doesn’t have the resources to increase its examinations of advisers, given its new duties under Dodd-Frank. It said 55% of brokers are inspected each year by the SEC and Finra, while just 9% of advisers are examined annually by the SEC.

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers

The U.S. Securities and Exchange Commission sued Trivium Capital Management LLC and an executive of Polycom Inc. in a case stemming from the government’s Galleon Group LLC insider-trading investigation.

Regulators allege that Trivium co-founder Robert Feinblatt, 41, and Jeffrey Yokuty, 37, an analyst at the New York-based hedge fund adviser, were given inside tips about Blackstone Group’s impending purchase of Hilton Hotels Corp. and traded on behalf of Trivium based on the information.

The SEC also alleges that Sunil K. Bhalla, former senior vice president of Polycom, a Pleasanton, California-based producer of networking applications, tipped information that helped Feinblatt and Yokuty make illicit profits of more than $15 million on behalf of Trivium’s hedge funds, according to an SEC statement.

“Today’s action reveals disturbingly corrupt arrangements — faithless company executives who secretly pass corporate information to hedge fund managers willing to violate the law for profit,” said Robert Khuzami, director of the SEC’s Division of Enforcement.

The SEC says that to date, it has brought enforcement actions against 27 defendants involving insider trading at numerous hedge funds, including Galleon Group.

The complaint says that Feinblatt and Yokuty allegedly received material nonpublic information from Roomy Khan, a former Intel Corp. executive who pleaded guilty in the Galleon Group criminal case and is cooperating with the government’s continuing probe.

Lawyers for the defendants couldn’t be immediately reached for comment.

The case is SEC v. Robert Feinblatt, 11-CV-0170, U.S. District Court, Southern District of New York Manhattan).

Posted by Carmine Angone, Director, ICS Compliance - Confidence in Compliance for Hedge Fund Managers, Investment Advisors and Broker-Dealers