NEW YORK (AP) -- Tens of thousands of dollars paid to a corrupt analyst for secrets was funneled through his wife, an ex-analyst told a jury on Wednesday at the insider trading trial of two former hedge fund managers.
The testimony by ex-analyst Jesse Tortora came in the first full day of testimony in the latest trial to result from the government's crackdown on analysts who trade secrets about public companies and disguise the information as legitimate research.
Tortora said his boss, Todd Newman, benefited from tips that analyst Sandy Goyal provided about Dell Inc. in 2008.
Prosecutors say Newman, a former portfolio manager with Diamondback Capital Management, made about $2.8 million with the tips while fellow defendant Anthony Chiasson, co-founder of hedge fund Level Global Investors, earned about $50 million illegally by trading Dell stock. Both have pleaded not guilty. Their lawyers say they believed analysts had provided them legal research about Dell rather than tips Goyal obtained from a friend at the company.
Tortora said Newman helped him arrange for Goyal's wife to be paid a total of $175,000 for her husband's tips about Dell, even though she did no stock research of her own. He said the unusual payment arrangement was necessary because Goyal was not allowed to work as a consultant for other companies. The witness said Newman helped clear the way for some of the money to be paid as a $100,000 end-of-year bonus when Goyal's wife obtained a job and was unable to accept payments into a new year after she began working.
Tortora and Goyal have pleaded guilty to charges in the case. Goyal is scheduled to testify later in the trial, the last scheduled in the federal government's five-year crackdown on insider trading.
Prosecutors have secured 69 convictions, including those of a former billionaire hedge fund founder and a former board member for Goldman Sachs and Procter & Gamble Co.
The trial of Newman and Chiasson does not include audiotaped conversations that were pivotal in the other prosecutions. Prosecutors are relying on emails, instant messages, trading records and testimony.