Portfolio Manager Busted For Insider Trading
Posted on Saturday, 7 of November , 2009 at 6:07 pm
NEW YORK—Former hedge fund portfolio manager Joseph Contorinis has been indicted on charges of conspiracy and securities fraud relating to $7 million in profits he allegedly made for the hedge fund through insider trading.
Contorinis, 45, of New York City, is expected to be arraigned in Manhattan federal court by U.S. District Judge Richard J. Sullivan on Nov. 12.
According to prosecutors, from 2004 through June 2006, Contorinis, then a portfolio manager of a hedge fund at an investment advisory firm, executed securities trades based on material, non-public information about mergers and acquisitions that Contorinis received from Nicos A. Stephanou who was working as an investment banker in New York City and London, England.
Stephanou and Contorinis had a close personal friendship, prosecutors say and that Contorinis knew that Stephanou was tipping him in violation of Stepahnou’s duty of confidentiality to his employer and its clients.
For example, from late 2005 through early 2006, Stephanou was on the investment banking team representing a private equity firm that was interested in acquiring Albertson’s Corporation. During the course of the transaction, Stephanou allegedly tipped Contorinis about positive and negative developments on the deal, and Contorinis executed trades based on that information.
As a result of this illegal trading, Contorinis allegedly made profits exceeding $7 million for his hedge fund.
During the allegedly conspiracy, prosecutors say Stephanou also tipped his friends Michael Koulourodis and George Paparrizos about material, non-public information relating to the mergers and acquisitions of several public companies.
On April 21, Paparrizos pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud. On Aug. 6, Paparrizos was sentenced to a term of six months of home confinement, a $10,000 fine, and forfeiture of $22,000 in unlawful proceeds.
On May 27, Stephanou pleaded guilty to six counts of conspiracy to commit securities fraud and one count of securities fraud. He awaits sentencing.
On Oct. 15, a federal grand jury returned a superseding indictment against Koulouroudis on one count of conspiracy to commit securities fraud and nine counts of securities fraud. 11-7-09
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