Wesley Wang, a former analyst for SAC Capital Advisors LP’s Sigma Capital unit, gave federal agents the names of about 20 people he said had traded on illegal inside information, some of whom are uncharged targets of the government’s investigation, US prosecutors said.
Wang, 39, who worked as a semiconductor analyst at Sigma Capital from 2002 to 2005, pleaded guilty last year to passing illegal tips to former Sigma Capital portfolio manager Dipak Patel and to Whitman Capital LLC hedge fund founder Doug Whitman. Wang’s testimony at Whitman’s criminal trial helped lead to his conviction on charges of conspiracy and securities fraud, prosecutors said in a letter dated January 2. Patel, who ran a five-person team investigating technology stocks before leaving SAC in 2011, hasn’t been charged with a crime.
“Wang has also identified a number of individuals involved in insider trading whom the FBI has not yet approached and/or whom the government has not yet charged,” Assistant US Attorneys Christopher LaVigne and Jillian Berman said in the letter to US District Judge Jed Rakoff in Manhattan. Parts of the letter were redacted. “These individuals have been identified as subjects of criminal investigations,” they wrote.
The government is seeking leniency for Wang, based on his cooperation, when Rakoff sentences him tomorrow. Wang faces as much as 10 years in prison. He is seeking probation.
“The full extent of Wang’s information and cooperation remains to be realised,” LaVigne and Berman said in the letter. Steven Cohen is the founder of SAC Capital. He hasn’t been charged with any wrongdoing.
Wang is one of eight current or former SAC employees linked by government prosecutors and regulators to insider trading while at the firm. They include Mathew Martoma, a former SAC portfolio manager who is charged with using inside information about the clinical trial of an Alzheimer’s drug to help SAC make $276 million in profits and averted losses. Prosecutors have called it the largest insider-trading scheme in history.
Martoma is charged with passing inside information on the drug trial to Cohen, who allegedly used it to liquidate a $700 million position in the companies promoting the drug.
Jonathan Gasthalter, a spokesman for SAC, declined to comment on the prosecutors’ letter. Stamford, Connecticut-based SAC has $14 billion under management. Gasthalter has said Cohen and SAC did nothing wrong.
Wang was an intern for Whitman’s firm before leaving to work for SAC in 2002. He told jurors that he and Whitman, whom he called a friend and mentor, exchanged tips on Cisco Systems Inc, Polycom Inc and Marvell Technology Group Ltd.
Prosecutors said Wang also admitted sharing illegal tips with his bosses at Trellus Management Co, where he worked as a consultant from 2005 to 2008. Wang’s Trellus bosses weren’t named in the letter.
Adam Usdan, a spokesman for New York-based Trellus, didn’t immediately return a phone message seeking comment.
In the letter, LaVigne and Berman said agents with the FBI learned from an unnamed cooperating source in 2008 that Wang was involved in insider trading. The source recorded incriminating telephone calls and meetings with Wang, they said.
From November 2008 until January 2009, the FBI tapped Wang’s phones, the prosecutors said. He later agreed to cooperate with the government’s insider-trading investigation, making recorded phone calls and meetings to gather incriminating evidence on people with whom he had exchanged inside information, according to the letter.
“Wang’s information and consensually recorded telephone calls and meetings enabled the FBI to pursue various avenues in insider trading investigations, which yielded tremendous success,” LaVigne and Berman said in the letter. “The importance of Wang’s information in this regard cannot be overstated.”
At Whitman’s trial, prosecutors played wiretapped recordings and displayed instant messages in which Wang and Whitman discussed stocks and their sources of confidential information about companies.
“Please stay quiet about it,” Wang said in a series of instant messages to Whitman about information Wang testified he had provided about Cisco Systems. “I’m getting paranoid. OK? Just do what you need to do but don’t tell anyone.”