Former Hedge Fund Founder Steven Fortuna Sentenced in Manhattan Federal Court for Insider Trading | WPN World People News

Preet Bharara, the United States Attorney for the Southern District of New York, announced that STEVEN FORTUNA, who co-founded the hedge fund S2 Capital LLC (S2), was sentenced today to two years of probation for his participation in an insider trading scheme in which he obtained and traded on material, non-public information (Inside Information) about various publicly traded companies from employees at other hedge funds. FORTUNA pled guilty in October 2009 to three counts of conspiracy to commit securities fraud and one count of securities fraud pursuant to a cooperation agreement with the government. He was sentenced today in Manhattan federal court by U.S. District Judge Sidney H. Stein.

According to the information, statements made during FORTUNA’s guilty plea proceeding, and the government’s sentencing submission in his case:

From July 2008 through March 2009, while working as a portfolio manager at a hedge fund he co-founded, FORTUNA obtained Inside Information concerning various technology companies from employees at other hedge funds for the purpose of trading on that information. The Inside Information was disclosed by company insiders in breach of their duties to their respective employers.

For example, in July and August 2008, FORTUNA obtained Inside Information concerning Akamai, Inc. (Akamai) from Danielle Chiesi, a portfolio manager at New Castle Partners, a hedge fund. Chiesi told FORTUNA that Akamai planned to report that its revenue guidance for the following quarter would miss expectations and that, internally, the company believed that its stock price would fall following the quarterly earnings announcement. FORTUNA executed trades based on that Inside Information, and earned approximately $2.4 million in profits for S2.

Source: U.S. Federal Bureau of Investigation