WASHINGTON, DC - US regulators have accused two men in the first-ever insider-trading case involving credit default swaps (CDS). The US Securities and Exchange Commission (SEC) alleges that Deutsche Bank bond salesman Jon-Paul Rorech passed on confidential information to fund manager Renato Negrin.
The SEC says Negrin, formerly a portfolio manager at the Millennium Partners fund, made an instant $1.2 million profit from the inside information, relating to a high-yield debt offering by Dutch publishing firm VNU, which Deutsche worked with in July 2006. Rorech's lawyers maintain the accusations have "no merit" and that their client - currently on leave from Deutsche - was "simply doing his job" and would fight the charges. Negrin also denies the charges and says that all the conversations that took place were legal and appropriate. Deutsche and Millennium are both co-operating with the regulators - Millennium added that it has a "zero-tolerance" policy on insider trading.