MANHATTAN (CN) - In another case linked to SAC Capital Advisors, the SEC claims in court that an employee of an SAC "affiliate" made $2.7 million from inside trading and helped SAC make another $1.1 million from it.
The SEC sued Ronald N. Dennis on Thursday, in Federal Court.
Dennis agreed to pay $200,000 to settle the charges, and will be barred from the securities industry, the SEC said in a statement.
The 17-page lawsuit states: "This case concerns insider trading by defendant Dennis, an analyst at the investment advisory firm CR Intrinsic Investors, LLC ('CR Intrinsic'), in the securities of Foundry Networks, Inc. ('Foundry') and Dell, Inc. ('Dell') based on material nonpublic information that he received in advance of major announcements by Foundry in July 2008 and by Dell in August 2008 and August 2009. Armed with this inside information, Dennis caused portfolio managers to whom he reported at CR Intrinsic to execute illegal trades in Foundry and Dell, and, as a result of this trading, a CR Intrinsic hedge fund generated approximately $2.7 million in profits and loss avoidance. Additionally, on at least one occasion in August 2009, Dennis indirectly caused a portfolio manager at CR Intrinsic's affiliate, S.A.C. Capital Advisors, L.P. ('S.A.C. Capital'), to execute trades based on the Dell inside information that generated over $1.1 million in profits for an S.A.C. Capital hedge fund. Thus, as a result of Dennis's unlawful conduct, hedge funds managed by S.A.C. Capital and its affiliate CR Intrinsic reaped approximately $3.8 million in profits and loss avoidance."
The SEC and federal prosecutors appear to be drawing a net of lawsuits around S.A.C. Capital Advisors founder Steven A. Cohen, who has not been charged with inside trading.