Federal prosecutors announced criminal charges Tuesday against three new defendants in the government’s broad-based insider trading probe.
Authorities said David Riley, a former chief information officer at Foundry Networks, leaked tips about the company’s pending $3 billion takeover in 2008 by Brocade Communications Systems to hedge fund analyst Matthew Teeple.
The government said Teeple then tipped others, resulting in trades that led to more than $27 million in profits and avoided losses. Teeple was an analyst at Artis Capital Management, a San Francisco-based hedge fund, according to people familiar with the matter.
Teeple also had leaked information to Karl Motey, a California technology consultant who pleaded guilty in the probe and has been cooperating with prosecutors, the government said.
U.S. Attorney Preet Bharara said Riley and Teeple, who are friends, engaged in a “high-stakes game that has repeatedly proven to be unwinnable.” He added that the case shows that “the ranks of privileged professionals who behave as if they are above the law continue to swell.”
Another defendant, John Johnson, 46, pleaded guilty to one count each of securities fraud and conspiracy, Bharara said.
Warren Buffett’s company will likely become one of the biggest shareholders in Goldman Sachs Group later this year, and Berkshire Hathaway won’t even have to part with any cash to accomplish it.
Berkshire and Goldman said Tuesday they had renegotiated an agreement that gave Berkshire the right to buy 43.5 million shares of the investment bank for $115 per share. The 2008 deal will be settled with stock this fall.
Buffett and Goldman’s chairman and chief executive, Lloyd Blankfein, characterized this new deal as an endorsement of the investment bank — much like they did when Buffett invested $5 billion in Goldman during the financial crisis.
“We intend to hold a significant investment in Goldman Sachs, a firm that I did my first transaction with more than 50 years ago,” Buffett said.
Goldman spokesman Andrew Williams said Tuesday that at current share prices the new warrant agreement would put Berkshire in the lower end of the top 10 of Goldman’s biggest shareholders, but the number of shares Berkshire will ultimately receive will be determined by Goldman’s stock price this fall.
— Associated Press
l Stocks rallied Tuesday, with the Dow Jones industrial average climbing 111.90 points to end at 14,559.65, a record closing. The Standard & Poor’s 500-stock index gained 12.08 points to finish at 1563.77, only 1.38 points below its all-time closing high.
l The Federal Reserve has ordered Citigroup to better police itself for the risk of money laundering, part of a broad U.S. regulatory crackdown on the potential for illicit money flows. The Fed told Citigroup’s board to submit a plan within 60 days to improve its oversight of companywide anti-money laundering compliance, according to a March 21 consent order made public Tuesday.
l T-Mobile USA on Tuesday said it will start offering the iPhone on April 12, filling what its chief executive said was “a huge void” in its phone lineup. “This is a big deal for us,” T-Mobile chief executive John Legere said at a New York event.
l Martin Durbin, executive vice president and chief lobbyist for the American Petroleum Institute, will become head of the American Natural Gas Alliance on May 1, according to an industry source and a note sent to ANGA members. The group represents 27 large independent natural gas exploration and production companies who are actively drilling in shale gas areas. Durbin is the brother of Senate Majority Whip Richard J. Durbin (D-Ill.).
l The Central Bank of Cyprus appointed accountant and banker Dinos Christofides as a special administrator to run the island’s largest commercial lender, Bank of Cyprus. As part of a $13 billion bailout, Cyprus agreed to fold small deposits of shuttering Cyprus Popular Bank, also known as Laiki, into the Bank of Cyprus. Its chairman, Andreas Artemis, has submitted his resignation.
l Steinway Musical Instruments, maker of its namesake pianos, is selling its building near Manhattan’s Carnegie Hall to investors led by JDS Development Group, builder of Chelsea’s Walker Tower condominium. Steinway agreed to sell its stake in Steinway Hall for $46 million, plus an undisclosed amount to be held in escrow, the company said in a statement Tuesday. The building is home to Steinway’s flagship retail showroom.
— From staff reports, news services
l 10 a.m.: Pending home sales index for February released.