(HedgeCo.Net) The Securities and Exchange Commission has filed insider trading charges against Sean Wygovsky, a former trader at a Canadian asset management firm, and Christopher Matthaei, a former partner at a U.S. broker-dealer, for using nonpublic information in advance of at least seven merger announcements involving Special Purpose Acquisition Companies (SPACs) to earn illicit profits of more than $3.4 million.

The SEC’s complaint alleges that Wygovsky learned material non-public information about upcoming SPAC mergers from his employer’s involvement in transactions related to the mergers. The complaint further alleges that, from May 2020 through April 2021, Wygovsky used encrypted messaging to tip his close friend and trading client, Matthaei, about the upcoming mergers. According to the complaint, Matthaei, who ran a trading and research group focused on SPACs during the relevant period, allegedly traded on Wygovsky’s tips.

“As alleged in our complaint, the defendants, both industry professionals, abused their positions to repeatedly trade inside information and profit from it in the active SPAC market,” said Nicholas P. Grippo, Director of the SEC’s Philadelphia Regional Office. “It is especially disappointing to see a trader and a broker-dealer resort to tactics like using encrypted communications to flaunt the rules designed to protect investors and the markets.”

The SEC’s complaint, filed in the United States District Court for the District of New Jersey, charges Wygovsky and Matthaei with violating the antifraud provisions of the federal securities laws and seeks permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against Matthaei and Wygovsky, and an officer and director bar against Matthaei. Wygovsky has consented to a bifurcated settlement, subject to court approval, under which he will be permanently enjoined from violating the federal securities laws. The SEC previously charged Wygovsky with perpetrating a lucrative front running scheme, and Wygovsky consented to a bifurcated settlement in that matter as well.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Matthaei.

(CNBC) U.S. stock futures were flat on Thursday night. Dow Jones Industrial Average futures added 14 points, or 0.04%. S&P 500 futures rose 0.09%, while Nasdaq 100 futures gained 0.05%.

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(CNBC) Sam Bankman-Fried pleaded not guilty in New York federal court Thursday to five additional charges related to the collapse of his former crypto exchange FTX and hedge fund Alameda Research. Bankman-Fried’s attorney, Mark Cohen, said he plans to file a motion that his client not be tried on all the counts.

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(Hedgeweek) Citadel, the hedge fund firm founded by Ken Griffin, is to make a ‘comeback’ in Japan with plans to reopen its Tokyo office later this year, almost 15 years after closing operations there during the global financial crisis, according to a report by the Financial Times.

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(Hedgeweek) New York–based hedge fund Marathon Asset Management made a profit of around $30 million in just a few days, after a well-timed bet on Credit Suisse Group AG bonds paid off, according to a report by Bloomberg.

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(Hedgeweek) Effissimo Capital Management, a Singapore-based activist hedge fund, could be in line to make a profit of around $768 million from Toshiba Corp’s buyout by a consortium led by domestic private equity firm Japan Industrial Partners, according to a report by Bloomberg.

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(CNBC) Initial filings for unemployment insurance ticked higher last week but remained generally low in a tight labor market. Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate, the Labor Department reported Thursday.

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(CNBC) Stock futures were little changed Wednesday night. Futures tied to the Dow Jones Industrial Average lost 14 points, trading near flat. S&P 500 futures and Nasdaq-100 futures were also near their flatlines. The moves come amid a hectic week for stocks. The three major indexes ended Wednesday higher, with the Nasdaq Composite leading the way with a roughly 1.8% jump.

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(Hedgeweek) Standard General is suing the US Federal Communications Commission (FCC) over its decision to hold hearings into the hedge fund’s planned $5.4 billion acquisition of TV station operator Tegna, according to a report by Reuters.

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(Hedgeweek)New York-based hedge fund firm Mass Ave Global, has written to investors informing them that it has decided to liquidate its China and Asia-focused funds and close its office in Hong Kong, according to a report by Reuters.

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(Hedgeweek) Extracting accurate data is one of the biggest reconciliation challenges buy-side investment managers face just over a year out from T+1 for US equities, according to new research from Gresham Technologies, in association with WBR Insights.

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(CNBC) The proliferation of artificial intelligence programs such as ChatGPT and Alphabet’s BardAI has already made big waves in financial markets, and a new study suggests that one day those programs may be able to trade in those markets all on their own. The investment industry has long used algorithms and quantitative trading programs in an effort to boost profits, but the recent breakthroughs in AI opens up new possibilities.

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(Opalesque) Private wealth represents “a phenomenal opportunity for the alternatives industry” as it is increasingly being used to fund alternative investments, said a study. According to the report by data provider Preqin, fund managers are increasingly pivoting towards the private wealth industry when it comes to capital raising, as it has become more difficult to achieve the same from institutional investors and private capital.

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(HedgeCo.Net) The Securities and Exchange Commission has charged former broker Surage Kamal Roshan Perera and his firm, Janues Capital Incorporated, with defrauding at least one investor out of millions by lying about investment opportunities and strategies, concealing trading losses, and using funds received from others to give the victim the promised returns in Ponzi-like fashion. The SEC has obtained emergency relief in court, including a temporary restraining order and an asset freeze.

According to the SEC’s complaint, from February 2022 until March 2023, Perera, a Long Island, NY resident, falsely told an investor, not named in the complaint, that Janues had access to specific restricted securities at discounted prices though connections with large, institutional investors. He allegedly claimed to also exercise a trading strategy, which he referred to as ‘Options Straddles,’ that would not only prevent any trading losses but also guarantee returns on some of the investments of up to 9 percent with the potential for returns of 50 percent. According to the complaint, Perera and Janues misappropriated at least $3.5 million of the investor’s funds to engage in highly speculative and leveraged trading. In total, Perera engaged in more than $2.5 billion in securities transactions, with nearly $3 million in trading losses. Perera then allegedly concealed the misappropriation and losses by providing the investor with phony confirmations and account statements that falsely showed the expected returns. The complaint also alleges that Perera further attempted to hide the losses by using funds received from other sources to make Ponzi-like payments to the investor.

“As noted in our complaint, Perera and his firm Janues engaged in predatory and fraudulent behavior by claiming to have special access to securities through their professional connections, but instead defrauded millions of dollars from his investor,” said Antonia Apps, Director of the New York Regional Office. “We will continue to pursue individuals who prey upon retail investors and steal money from their clients.”

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Perera.

The SEC’s complaint alleges that Perera and Janues violated antifraud provisions of the federal securities laws. Perera also was charged with aiding and abetting Janues’ alleged violations. The SEC’s complaint names Nishani Alahakoon, whose brokerage account Perera and Janues traded, as a relief defendant. The asset freeze obtained by the SEC prevents any further dissipation of investor funds. The SEC is seeking permanent injunctions and disgorgement of ill-gotten gains plus interest and penalties.

(CNBC) U.S. stock futures ticked higher Tuesday night after the major averages declined on the back of higher bond yields. Dow Jones Industrial Average futures rose by 41 points, or 0.13%. S&P 500 and Nasdaq 100 futures climbed 0.14% and 0.09%, respectively.

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(CNBC) FTX co-founder Sam Bankman-Fried paid out tens of millions of dollars worth of bribes to at least one Chinese government official, federal prosecutors alleged in a new indictment Tuesday. The indictment said accounts belonging to Bankman-Fried’s hedge fund, Alameda Research, were the target of a freezing order from Chinese police “in or around” November 2021.

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(CNBC) Jamie Dimon, the veteran JPMorgan Chase CEO and chairman, will be deposed over his bank’s links to disgraced former financier Jeffrey Epstein, according to a person with knowledge of the matter. Dimon agreed to be interviewed under oath, at an undetermined date in the future, for two civil lawsuits tied to the convicted sex offender Epstein.

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(CNBC) The run on Silicon Valley Bank’s deposits this month went far deeper than was initially known. Since the day regulators seized SVB, it was public knowledge that panicked customers withdrew $42 billion from the bank on March 9 on concerns that uninsured deposits were at risk.

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(Hedgeweek) Activist hedge fund Elliot Investment Management has decided not to proceed with its planned director nominations at Salesforce Inc, after a rise in the company’s stock price and the initiation of a series of strategic changes at the enterprise software firm, according to a report by Bloomberg.

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(Hedgeweek) Global hedge funds’ exposure to US banking stocks has hit a near 10-year record low as the turmoil in the sector triggered by the demise of Silicon Valley Bank and Signature Bank, and the ‘rescue’ of Credit Suisse by rival UBS, prompted managers to sell their positions, according to a report by Reuters.

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