The SEC today charged former hedge fund portfolio manager Renato Negrin and bond salesman Jon-Paul Rorech with unlawful insider trading violations concerning credit default swaps of Netherlands-based VNU NV in 2006.
Mr. Negrin, formerly a credit trader and hedge fund portfolio manager at Millennium Management, allegedly acted on an illegal tip about the restructuring of a bond issuance by VNU provided by Mr. Rorech, a director in the institutional sales group of Deutsche Bank Securities, according to the civil complaint filed in U.S. District Court in New York.
The complaint alleges that Mr. Rorech violated Deutsche Bank Securities’ written confidentiality and inside information policy in giving Mr. Negrin information about the changes to the VNU credit default swaps before that information was available publicly.
Mr. Negrin denies trading on inside information. “His conversations with Mr. Rorech concerned a publicly announced transaction and was entirely appropriate,” said Mr. Negrin’s attorney, Lawrence Iason, principal, Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer.
Tripp Kyle, a Millennium Management spokesman, declined to provide details about the timing and circumstances of Mr. Negrin’s departure from the firm.
In a statement issued today, executives of Millennium Management said they cooperated with the SEC’s inquiries into its former employee. “We have a zero-tolerance policy toward insider trading, and Millennium requires every employee to certify annually that they are aware of and in compliance with our policies. Millennium employs a small army of compliance personnel who conduct surveillance, review e-mails, and make every effort to deter or prevent any illegal or improper activity,” said Israel Englander, chairman and CEO of Millennium Management.
“The SEC’s case has no merit. Mr. Rorech did not commit insider trading or any other violation of the securities laws. Mr. Rorech intends vigorously to defend his position and expects to be completely vindicated in this matter,” said Mr. Rorech’s attorney, Richard M. Strassberg, partner at Goodwin Procter.
“We will continue to look into this matter closely in cooperation with the SEC,” said Michele Allison, a Deutsche Bank spokeswoman. She declined to comment further on the pending litigation.
A source who insisted on anonymity said Mr. Rorech was placed on paid leave by Deutsche Bank several weeks ago after the SEC informed him that it intended to file charges against him.
