Insider trading case draws in more Mass. companies
The insider trading case that rocked Wall Street last month grew even larger today, drawing in more Massachusetts companies and a hedge fund manager with a home in Westwood.
The US Department of Justice said that hedge fund managers used inside information to illegally trade shares of Marlborough network technology company 3Com Corp. and Kronos Inc. of Chelmsford, a maker of workforce management software.
US attorneys said that in the 3Com case, the inside information came from a New York attorney employed by the prominent Boston law firm Ropes & Gray. The attorney allegedly got the information while acting as an advisor to Boston investment firm Bain Capital LLC during its 2007 acquisition of 3Com.
US attorneys in New York today announced the arrests of nine suspects in the case on charges that include trading on inside information about Bain's plan to acquire 3Com, and the purchase that same year of Kronos by the equity firm of Hellmann & Friedman.
In addition, the government announced that Steven Fortuna of Westwood, former managing director of S2 Capital LLC in Boston, has pleaded guilty to insider trading involving shares of Akamai Technologies Inc. of Cambridge.
Last month, Danielle Chiesi, an employee of New York hedge fund New Castle Funds LLC, was arrested for insider trading of Akamai stock. It was alleged that Chiesi shared her inside information with Fortuna. His S2 hedge fund used the knowledge to make illicit trades of Akamai stock which netted the fund a profit of about $2.4 million.
To read the criminal complaints on the Department of Justice web site, please click here.
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