A former SAC Capital Advisors LP portfolio manager avoided prison on Thursday after helping federal authorities win a guilty plea and $1.8 billion in financial penalties from the hedge fund run by billionaire Steven A. Cohen.
In sparing Noah Freeman a prison term, U.S. District Judge Jed Rakoff in Manhattan cited the "extraordinary" cooperation he provided after pleading guilty in 2011 to conspiracy and securities fraud charges.
"The very nature of insider trading makes it virtually impossible to prosecute without the help of cooperators," Rakoff said.
Rakoff also ordered Freeman to forfeit $181,000, which will offset a prior $1 million settlement with the U.S. Securities and Exchange Commission.
Freeman, 39, apologized for putting his family through the case, which flowed out of an insider trading crackdown by Manhattan U.S. Attorney Preet Bharara's office that has resulted in charges against 92 people since 2009.
Freeman was one of eight SAC Capital employees charged with insider trading who either pleaded guilty or were convicted at trial. SAC agreed in 2013 to pay $1.8 billion and plead guilty to fraud charges.
SAC Capital last year rebranded itself as Point72 Asset Management as it shifted mainly toward managing Cohen's own fortune, estimated recently by Forbes at $10.3 billion.
Prosecutors said Freeman, while at hedge fund Sonar Capital Management from 2005 to 2008 and SAC Capital from 2008 to January 2010, obtained information often involving technology companies from insiders that he used for trading.
Freeman would connect with insiders through a firm called Primary Global Research that connected investors with industry experts, as well as research consultants who got tips from corporate employees, prosecutors said.
Freeman would also swap inside information with people at other hedge funds gathering their own tips, prosecutors said.
Freeman testified against Winifred Jiau, a former Primary Global Research consultant accused of passing tips about Marvell Technology Group Ltd and Nvidia Corp to him and hedge fund executive Samir Barai in exchange for more than $200,000. Jiau was convicted and sentenced in 2011 to four years in prison. She was released in June. Barai, a principal at Barai Capital Management, pleaded guilty and has not been sentenced.
Prosecutors said Freeman also implicated others, including another SAC Capital portfolio manager, Donald Longueuil. He was sentenced to 2-1/2 years in prison in 2011 after pleading guilty and was released in December 2013.
The case is U.S. v. Freeman, U.S. District Court, Southern District of New York. No. 11-cr-116.
