(CN) – Danielle Chiesi pleaded guilty Wednesday in what prosecutors call the largest hedge fund insider trading case in history. Chiesi, a consultant for the hedge fund New Castle Funds, traded on tips from a former IBM executive.
Chiesi made at least $1.7 million by trading on secrets that former IBM executive Robert Moffat admitted he leaked to her. Moffat was sentenced in September to 6 months in prison.
Chiesi pleaded guilty in Manhattan Federal Court.
“By sharing and conspiring to trade on inside information, Chiesi compromised the companies she sold out and distorted the market for their stocks,” U.S. Attorney Preet Bharara said in a statement. “Today’s plea should send yet another strong message that we have zero tolerance for privileged professionals who game the system and who think the rules apply only to everyone else.”
This case is the first investigation in which federal agents admitted using wiretaps to investigate Wall Street inside trading.
Transcripts show that Chiesi had expressed concern to her co-conspirators about being caught in the scheme.
“You put me in jail if you talk,” she said in one conversation. “I’m dead if this leaks. I really am … and my career is over. I’ll be like Martha fucking Stewart.”
Charges are still pending against Sri Lankan billionaire Raj Rajaratnam, the alleged kingpin.
Chiesi is scheduled for sentencing on May 13. Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky and Special Assistant U.S. Attorney Andrew Michaelson are in charge of the prosecution.