U.S jury convicts ex-Jefferies hedge fund manager
* One of several insider trading cases against hedge funds
* Joseph Contorinis found guilty after three-week trial
(Adds guilty pleas in case)
NEW YORK, Oct 6 (Reuters) - A U.S. jury convicted a former Jefferies Group Inc (JEF.N) affiliate manager of conspiracy and securities fraud on Wednesday, one of several prosecutions brought last year over allegations of insider trading at hedge funds.
Joseph Contorinis, the former general partner of Jefferies Asset Management LLC's Jefferies Paragon Fund, was found guilty in Manhattan federal court by a jury that deliberated for less than two days on the evidence from a three-week long trial.
Contorinis, 46, was among several Wall Street professionals and their relatives or friends charged in February 2009 with running an insider trading ring with information on mergers and acquisitions, in particular the 2006 buyout of Albertsons Inc supermarket chain.
The hedge fund manager's conviction was the fourth in the case in which he was accused of earning more than $7 million in illegal profits and helping family and friends in Greece, Cyprus and the United States reap millions in profits from insider tips.
The government's star witness at the Contorinis trial, former UBS AG (UBSN.VX) manager Nicos Stephanou, pleaded guilty and testified in exchange for leniency. Two other defendants, Michael Koulouroudis and George Paparrizos, have also pleaded guilty.
The case is unrelated to high-profile charges in the same court in October 2009 against Galleon hedge fund founder Raj Rajaratnam and about 20 others, but could have broader ramifications for prosecutors and securities regulators in their crackdown on insider trading.
One of Contorinis' defenses was that he did not benefit from trading on non-public information because his hedge fund had been trading frequently in some of those stocks for many weeks. In court papers, Rajaratnam's lawyers similarly have argued that Galleon's frequent trading in stocks undermines the government's argument he and the fund illegally profited from the use of inside corporate information.
The jury found Contorinis guilty on one count of conspiracy to commit securities fraud and seven counts of securities fraud. He faces up to 20 years in prison when he is sentenced on Feb. 4, 2011.
Lawyers for Contorinis did not immediately respond to requests for comment.
Manhattan U.S. Attorney Preet Bharara said: "On top of this office's recent insider trading convictions, today's guilty verdict sends yet another strong message of deterrence to anyone who is thinking about gaming the system like Joseph Contorinis did."
Three associates of Contorinis pleaded guilty in the case. Twelve defendants have pleaded guilty in the Galleon case.
Contorinis' conviction could spell trouble for former Blackstone Group investment banker Ramesh Chakrapani, a close friend of the former UBS manager Stephanou.
In June, U.S. District Judge Richard Sullivan granted a request by the U.S. Securities and Exchange Commission to dismiss the civil complaint against Chakrapani, in part because Stephanou was unavailable to testify against Chakrapani.
"The facts relating to Ramesh remain unchanged: he was never alleged to have been tipped by anyone about any stock; he never traded a single share of any of the companies at issue; and he never made a single penny from any purported insider trading," his lawyer, Michael Sommer, said in a statement.
The case is USA v Contorinis, U.S. District Court for the Southern District of New York, No. 09-01083.
(Reporting by Grant McCool, Matthew Goldstein and Basil Katz; editing by Gerald E. McCormick, Andre Grenon and Matthew Lewis)
((grant.mccool@thomsonreuters.com; + 1 212-393-9461; Reuters Messaging: grant.mccool.reuters.com@reuters.net)) Keywords: HEDGEFUND/CONTORINIS
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