A former Needham hedge fund manager, Todd Newman, was sentenced in New York Thursday to 4½ years in prison for his role in what authorities called a multimillion-dollar insider trading scheme.
Newman, 48, worked for Diamondback Capital Management, a Stamford, Conn., investment firm that was swept up in the FBI’s insider-trading investigation in 2010. Newman was convicted on four counts of securities fraud and one count of conspiracy to commit securities fraud.
Prosecutors said he made $4 million in illegal profits by obtaining nonpublic information on Dell Inc. ahead of earnings announcements.
His lawyers were fighting to keep him out of prison on bail, pending an appeal.
In Massachusetts, the state pension fund had exposure to Diamondback and another firm, Level Global Investors, which was raided on the same day in 2010. The state had $48.4 million in Diamondback and $17.2 million in Greenwich, Conn.-based Level Global, which it then proceeded to withdraw. Both firms have since shut down.
US District Judge Richard J. Sullivan also sentenced Newman to one year of supervised release and ordered him to forfeit $737,724 and pay a $1 million fine.