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Wednesday, May 29, 2024 | Back issues
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More Fallout From Rajaratnam Case

MANHATTAN (CN) - In still more fallout from the Raj Rajaratnam inside trading case, the SEC accused a former accounting manager at Nvidia of tipping cronies who made $16.5 million for themselves and their hedge funds from the inside information.

The SEC sued Chris Choi in Federal Court.

"During 2009 and 2010, Choi - an accounting manager at Nvidia - obtained material nonpublic information about the contents of Nvidia's upcoming quarterly earnings announcements and tipped the information to his friend Hyung Lim ('Lim')," the complaint states.

It continues: "After receiving these tips from Choi, Lim passed the information to Danny Kuo ('Kuo'), a hedge fund manager at Whittier Trust Company ('Whittier'), who provided it to his boss and to a group of investment professionals who worked at other hedge funds, including Diamondback Capital Management, LLC ('Diamondback'), Level Global Investors, LP ('Level Global'), and Sigma Capital Management, LLC ('Sigma Capital').

"The information that Choi provided to Lim and Lim relayed to Kuo included Nvidia's highly confidential calculations of its revenues, gross profit margins, and other financial metrics. Kuo and other downstream recipients of Choi' s information used it to trade in advance of Nvidia earnings announcements and reaped illicit trading gains and avoided losses of approximately $16.5 million for hedge funds managed by Whittier, Diamondback, Level Global, and Sigma Capital."

Choi agreed to settle the charges by paying a $30,000 fine and being barred from serving as officer or director of a publicly traded company for 5 years. He did not have to admit wrongdoing, as is customary with the SEC.

Choi is the 45th defendant charged by the SEC in its investigation of "expert networks," the agency said in a statement. "The investigation has exposed widespread insider trading by investment professionals, hedge funds, and corporate insiders for illicit profits of approximately $430 million," the SEC said.

Lim, Kuo, Diamondback, Level Global and Sigma Capital have been charged separately.

"The expert networks investigation arose out of the SEC's inquiry into Galleon Management and Raj Rajaratnam - a case in which the SEC has charged an additional 35 defendants whose insider trading generated illicit profits of more than $96 million," the SEC said in the statement.

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