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Senior Managing Director at New Castle Hedge Fund Pleads Guilty in Manhattan Federal Court to Insider Trading
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced today that MARK KURLAND
pleaded guilty to a two-count Information charging him with
conspiracy and securities fraud stemming from his involvement in
the largest hedge fund insider trading case in history. KURLAND
was a Senior Managing Director at New Castle Partners ("New
Castle"), which formerly operated as an equity hedge fund at Bear
Stearns Asset Management and then JP Morgan Chase. KURLAND
pleaded guilty before United States Magistrate Judge RONALD L.
ELLIS to conspiring to commit insider trading crimes with
DANIELLE CHIESI, who formerly worked at New Castle, and who is
charged separately in an Indictment with RAJ RAJARATNAM. KURLAND
also pleaded guilty to substantive securities fraud.
KURLAND consented today to the filing of a criminal
Information against him in Manhattan federal court. According to
the Information, as well as statements made during today's guilty
plea proceeding:
From mid-August 2008 through January 2009, KURLAND and
CHIESI participated in a scheme to execute securities
transactions based on material, nonpublic information ("Inside
Information") pertaining to Advanced Micro Devices, Inc. ("AMD"),
Akamai Technologies, Inc. ("Akamai"), and Sun Microsystems Inc.
("Sun"). As part of the conspiracy, CHIESI obtained Inside
Information from sources at Akamai and International Business
Machines Corp. ("IBM"). CHIESI provided that Inside Information
to KURLAND with the understanding that New Castle, at KURLAND's
direction, would trade based on it. CHIESI also got KURLAND's
permission to direct trading at New Castle on the basis of that
Inside Information. KURLAND knew that the Inside Information
CHIESI obtained from her sources at Akamai and IBM was obtained
in breach of fiduciary and other duties of trust and confidence.
The Information charges KURLAND with one count of
conspiracy to commit securities fraud and one count of securities
fraud. The conspiracy count carries a maximum sentence of five
years in prison and a maximum fine of the greater of $250,000 or
twice the gross gain or loss from the offense. The securities
fraud count carries a maximum sentence of 20 years in prison and
a fine of $5 million. KURLAND is also subject to forfeit the
proceeds of his crimes.
KURLAND, 61, resides in Mt. Kisco, New York. His case
is assigned to United States District Judge VICTOR MARRERO.
KURLAND is scheduled to be sentenced on April 27, 2010.
United States Attorney PREET BHARARA said: "Hedging
your bets with illegal inside information isn't savvy business;
it's a violation of federal law. Today, Mark Kurland has
accepted the consequences of his calculating, criminal choice."
Mr. BHARARA praised the work of the Federal Bureau of
Investigation and thanked the United States Securities and
Exchange Commission for its assistance in the investigation. Mr.
BHARARA also noted that the investigation is continuing.
Assistant United States Attorneys JONATHAN STREETER and
REED BRODSKY and Special Assistant United States Attorney ANDREW
MICHAELSON are in charge of the prosecution.
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