NEW YORK, N.Y. – A former hedge fund manager at a Connecticut firm was sentenced to 4 1/2 years in prison Thursday for insider trading by a judge who said he could not understand how someone making $3 million to $4 million annually would get greedy.
Todd Newman, 48, of Needham, Mass., said nothing before U.S. District Judge Richard J. Sullivan announced the prison time, along with a $1 million fine and $738,000 in restitution.
Sullivan said it was “hard to understand why someone who reached the pinnacle of success in society … would risk all of that for more.”
He noted that Newman was making $3 million to $4 million annually. The government said in court papers that he earned more than $10 million from 2007 to 2010.
“This was all about money and getting more,” the judge said. “It’s hard to explain why somebody would do that when they have so much.”
Newman was convicted in December of conspiracy and insider trading charges for trades he made while he managed money at Stamford, Conn.-based Diamondback Capital Management in 2008 and 2009. The trades on tips from insiders at public companies generated $3.6 million in profits.
The case was part of a government crackdown on insider trading in recent years that has resulted in more than 80 arrests and 70 convictions.
Newman was convicted along with Anthony Chiasson, a co-founder of Greenwich, Conn.-based Level Global Investors. The government said Chiasson had earned about $50 million illegally by trading on a tip received about Dell Inc. stock in 2008. When the men were arrested in January 2012, the government said the Dell trades represented the largest insider trading transaction ever prosecuted in Manhattan. Prosecutors said it was part of a $78 million scheme involving at least seven financial industry professionals.
Chiasson, of Manhattan, is scheduled to be sentenced this month.
U.S. Attorney Preet Bharara said in a statement that Thursday’s sentence made Newman “the first member of this corrupt circle of friends to be punished for his conduct.”