Hedge fund manager guilty of $7m insider-trading scheme

Joseph Contorinis used inside information about mergers and acquisitions to execute trades

NEW YORK – Former hedge fund manager Joseph Contorinis, has been found guilty on eight counts of fraud in an insider-trading case in New York City.

Over a two-year period from 2004 to 2006, Contorinis received information from Nicos Stephanou, a UBS investment banker, based in New York and London, on mergers and acquisitions. Contorinis then used that information to execute trades, accruing, according to prosecutors, up to $7 million in profits, despite knowing that Stephanou was violating confidentiality agreements with both his employer and clients.

Stephanou previously pleaded guilty and agreed to act as the government's chief witness in the trial. Contorinis could face up to 20 years in prison on each of the most serious charges and millions of dollars in fines, and is due to be sentenced on February 4, 2011.

Preet Bahara, US Attorney for the Southern district of New York, said the verdict "sends yet another strong message of deterrence to anyone who is thinking about gaming the system like Joseph Contorinis did". Bahara also thanked the FBI and SEC for their assistance in the multi-lateral investigation of Contorinis' case.