NEW YORK (AP) — A former hedge fund manager should serve at least five years in prison for his insider trading conviction and repay $39 million to his former employer for the troubles he put the company through and the money it lost as a result, the government told a judge Friday.
Prosecutors made the recommendations in papers filed in U.S. District Court in Manhattan in advance of Thursday's sentencing of Todd Newman, who was convicted in December of conspiracy and insider trading charges for trades that generated $3.6 million in profits when he worked at Stamford, Conn.-based Diamondback Capital Management.
The government recommended that Newman be sentenced within the recommended guidelines range of five years, three months to 6 1/2 years.
"Newman was a central and active participant in a large-scale conspiracy to exchange and trade on inside information about multiple stocks," prosecutors said. "The participants in the conspiracy included at least five analysts at different hedge funds and investment firms and five portfolio managers at those same firms."
The government said Diamondback is a victim and should be owed restitution, including $2.6 million or 25 percent of the salary Newman received from 2007 to 2010. The company also seeks $10 million in attorneys' fees and other expenses related to inquiries by regulatory authorities as well as $26 million, the amount the company lost in management fees when $1.3 billion was withdrawn by investors after they heard that the FBI had raided the company's offices.
Defense lawyers have argued for leniency. They called Newman, of Needham, Mass., a "fundamentally kind, generous and decent human being" whose life does not revolve around money.
"There is no evidence that greed or a desire for a more luxurious lifestyle played any role in the conduct at issue," the lawyers wrote of a man who was born in Minneapolis and raised in Wilton, Conn.
Prosecutors disagreed, saying Newman tried to make millions of dollars in illicit profits for Diamondback to boost his compensation and increase his standing and reputation at the fund.