NEW YORK — Two former hedge fund managers, including one from Needham, Mass., were convicted Monday on insider trading charges, including allegations that one of them had made as much as $50 million on a tip about Dell Inc.’s earnings.
Todd Newman and Anthony Chiasson were convicted in federal court in Manhattan after a five-week trial that included testimony from two analysts for the men. The jury reached its verdict after two days of deliberations.
Newman, of Needham, Mass., is a former portfolio manager with Stamford, Conn.-based Diamondback Capital Management who was accused of making about $2.8 million from illegal tips.
Chiasson, of Manhattan, is a cofounder of Greenwich, Conn.-based Level Global Investors. The government said he earned about $50 million illegally by trading on a tip received about Dell’s stock in 2008.
The men denied engaging in insider trading, and their lawyers argued they believed they were basing their trades on legitimate research.
The verdict raised the number of convictions in the government’s five-year crackdown on insider trading to 71.
In a news release, US Attorney Preet Bharara said the men ‘‘join the ranks of high-level investment fund managers who are being made to answer for their extraordinarily bad risk-reward analysis about what is right and what is wrong.’’
‘‘Like scores of privileged professionals before them, Newman and Chiasson are finding out the hard way that the opportunity cost of gaining an illegal edge in the market is the loss of one’s liberty,’’ Bharara added.
Sentencing was set for April 19 for both men. Defense lawyers said they would appeal the verdicts.
When the men were arrested in January, the government said the Dell trades represented the largest insider trading transaction ever prosecuted in Manhattan. Prosecutors said it was part of a $78 million scheme involving at least seven financial industry professionals.
Nearly $62 million of the $78 million resulted from tips provided by a Dell employee to a former Dell worker who spread the information among friends, some of whom worked at five investment houses, including three hedge funds. The authorities said another $15.7 million was earned in 2008 and 2009 on trades involving a visual computing technology company, Nvidia Corp.
Diamondback is shutting down, having been ensnared in the federal insider-trading probe as a result of these former employees. The Massachusetts state pension fund was among a host of investors that took its assets out of the firm when the scandal broke.