SEC charges Negrin and Rorech in first CDS insider trading action
| Regulatory |
| SEC charges Negrin and Rorech in first CDS insider trading action |
| Infovest21 Staff |
| May 5, 2009 EST |
| Renato Negrin, a former portfolio manager at Millennium Partners LP, and Jon-Paul Rorech, a salesman at Deutsche Bank Securities, were charged with insider trading today by the SEC. The action involves VNU N.V., an international holding company that owns Nielsen Media and other media businesses.
The SEC alleged that Rorech learned information from Deutsche Bank investment bankers about a change to the proposed VNU bond offering that was expected to increase the price of the CDS on VNU bonds. Deutsche Bank was the lead underwriter for a proposed bond offering by VNU. The SEC says Rorech illegally tipped Negrin about the contemplated change to the bond structure and Negrin then purchased CDS on VNU for a Millennium hedge fund. When news of the restructured bond offering became public in late July 2006, the price of VNU CDS substantially increased and Negrin’s Millennium’s VNU CDS position made a $1.2 million profit. This is the first insider trading enforcement action involving credit default swaps. The SEC has brought more than 100 cases involving hedge funds in the past five years. This year alone, there have been more than 20 cases. The SEC has already brought more enforcement actions involving hedge funds in the first four months of 2009 than in all of 2008. |