New York (HedgeCo.Net) – A former analyst at hedge fund Artis Capital Management LP pled guilty in New York federal court on Wednesday to an insider trading scheme involving Brocade Communications Systems Inc.’s $3 billion acquisition of a technology company.
Matthew Teeple, 42, copped to one count of insider trading conspiracy at a hearing in Manhattan court. Prosecutors say Teeple participated in a $27 million insider trading scheme that included a lucrative bet ahead of Brocade’s July 2008 acquisition of Foundry Networks Inc. The tip allegedly came from David Riley, who served as Foundry’s chief information officer at the time.
As part of a plea agreement, Teeple agreed to pay $553,890 in forfeiture. He also agreed not to seek a prison sentence other than the maximum term of five years. Teeple’s attorney Eric Bruce declined to comment.
Riley is scheduled to go to trial on July 7. His attorney could not be immediately reached for comment on Wednesday.
With the agreement, Teeple joins a list of more than 80 defendants to be convicted of insider trading or plead guilty since October 2009, when Preet Bharara became the Manhattan U.S. Attorney.
According to prosecutors, Teeple received multiple illegal tips from Riley in advance of market-moving announcements by Foundry. The company’s stock price, for example, increased by about 32 percent the day following the Brocade merger announcement.
Teeple tipped off two others about the deal, the government alleged. Those individuals — a pension investment officer named John Johnson and a former hedge fund consultant named Karl Motey — have each pled guilty.
Motley, in particular, has played a central role in the government’s sprawling insider trading crackdown. After the FBI caught him insider trading, he became a government informant and helped to ensnare others.
The probe also resulted in civil claims against Ronald Dennis, a former analyst at SAC Capital Advisors LP. The U.S. Securities and Exchange Commission filed and settled a case against Dennis in March, alleging he received an inside tip from Teeple about the Foundry deal. The SEC also accused Dennis of obtaining inside information about Dell Inc.’s financial performance. The information enabled SAC to generate profits and avoid losses of about $3.2 million, according to the SEC.
Dennis, who was not criminally charged, neither admitted nor denied the allegations — an arrangement that drew skepticism from a federal judge. An attorney for Dennis could not be immediately reached for comment on Wednesday on Teeple’s plea.
The government is represented by Michael Holland, Sarah McCallum and Telemachus Kasulis.
