Insider Settlement Against Chiasson Fund Wiped Out

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By Rob Tricchinelli

Jan. 26 — A federal judge Jan. 26 ordered the SEC to pay back $21.5 million from a prior settlement with Level Global Investors Ltd. in light of a Second Circuit decision that overturned fund co-founder Anthony Chiasson's insider trading conviction.

Level Global asked the U.S. District Court for the Southern District of New York Jan. 22 to undo the settlement. The Securities and Exchange Commission said in a Jan. 25 filing that it didn't oppose the request.

Judge Shira Scheindlin also dismissed the case against Level Global and gave the SEC 30 days to pay back the $21.5 million.

“Mr. Chiasson is gratified his successful appeal validated that Level Global's research and trading conduct was proper at all times and paves the way for the return of settlement funds to his former clients,” Chiasson's attorney, Gregory Morvillo of Morvillo LLP, said Jan. 26. “While he is still disappointed that Level prematurely entered into the original agreement, he is grateful that the SEC eventually recognized the import of the appellate ruling by fully reimbursing the fund to the benefit of his investors who entrusted their capital to him for many years.”

Background

After the Second Circuit's December 2014 decision in United States v. Newman, the Southern District of New York also dismissed the SEC's civil case against Chiasson and Level Global employee Spyridon Adondakis, who worked for Chiasson (202 SLD, 10/20/15).

Level Global settled the SEC's allegations in the same suit (83 SLD, 4/30/13), but the entire civil case was thrown into doubt after the Second Circuit overturned the criminal insider trading convictions of Chiasson and fund manager Todd Newman (238 SLD, 12/11/14).

The U.S. Supreme Court declined to review the Second Circuit case but recently agreed to take up an insider trading case out of the Ninth Circuit dealing with whether prosecutors must show that insiders passed on information in exchange for a concrete benefit (12 SLD, 1/20/16).

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com