Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, February 2, 2010

SEC Charges Former Hedge Fund Portfolio Manager with Insider Trading

The SEC today announced insider trading charges against David R. Slaine, a former hedge fund portfolio manager at DSJ International Resources Ltd. (d/b/a “Chelsey Capital”). The SEC alleges that Slaine used inside information tipped by a former executive at UBS Securities LLC (“UBS”) to trade ahead of upcoming UBS analyst recommendations for Chelsey Capital and in his personal brokerage account. The complaint alleges that Slaine’s personal profits from this illicit scheme totaled more than $500,000.

The Commission previously filed insider trading charges against Chelsey Capital and other defendants in connection with this insider trading scheme. See SEC v. Guttenberg, et al., No. 07 CV 1774 (S.D.N.Y.) (PKC)/Lit. Rel. 20022. Chelsey Capital and these other defendants previously entered into settlements with the Commission, and final judgments have been entered against them. Without admitting or denying liability, Chelsey Capital consented to a final judgment that ordered permanent injunctive relief, disgorgement of $3,637,548, plus prejudgment interest of $1,626,344, and a $3,637,548 civil penalty.

As a result of conduct described in the complaint, the Commission alleges that Slaine violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission’s complaint seeks permanent injunctive relief, disgorgement of Slaine’s personal illicit profits, plus prejudgment interest, and civil monetary penalties.

In a related criminal case, the U.S. Attorney’s Office for the Southern District of New York announced today that Slaine has pled guilty to criminal charges in connection with this insider trading scheme.

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