GO
Loading...

A Mystery From the Insider Trading Bust: Who Is Cooperating Witness Number 5?

While hedge fund employees breathed a sign of relief today when they learned that none of their numbers had gone down in the big insider trading sweep today, a close read of one of the criminal complaints filed in federal court today reveals that New York hedge funds have a mole in their midst.

Erik Snyder | Getty Images

The mole is referred to as CW-5 in the criminal complaint filed in a federal court in New York City today. According to the complaint, CW-5 is an employee of a New York based “hedge fund” referred to as “Hedge Fund -2.” (“Hedge Fund -1” is most likely Spherix Capital, which was started by Richard C.B. Lee, a former SAC Capital employee who is identified as CW-1 in the complaint.)

So who exactly is CW-5? We do not know. All we do know is that he has not yet been charged—but hopes that cooperating with the government will earn him a reduced sentence if he is charged.

Here’s what we do know:

  • The hedge fund in question was a client of Primary Global Research. It paid for the services it received from Primary Global by conducting its trades through Primary Global’s broker-dealer arm.
  • The government alleges that Tony Longoria, one of the suspects arrested today, provided information on AMD’s top-line revenue and unit-sales on multiple occasions.
  • CW-5 says he believed the information was illicit insider information.
  • CW-5 would pass the information on to a portfolio manager at the hedge fund. The hedge fund allegedly executed several trades related to AMD’s stock based on this information.

So look around you. Who seems to know an awful lot about AMD?

______________________________________________________

Questions? Comments? Email us atNetNet@cnbc.com

Follow John on Twitter @ twitter.com/Carney

Follow NetNet on Twitter @ twitter.com/CNBCnetnet

Facebook us @ www.facebook.com/NetNetCNBC

Wall Street