New York, January 24 (FinanceEnquiry.com) - Diamondback Capital Management LLC had been accused by the Securities and Exchange Commission (SEC) of having illegally traded Dell Inc (NASDAQ: DELL) and Nvidia Corp (NASDAQ: NVDA) stock based on nonpublic information. In order to settle the regulatory claims, the company has agreed to pay more than $9 million.

SEC had instituted the lawsuit on January 18 over trades made in 2008 and 2009 by former employees. SEC’s claims were part of a wider insider-trading case involving five different hedge funds and investment firms. It claimed that Todd Newman, Diamondback’s former portfolio manager, had insider information and had made $3.8 million in illegal profits for his hedge fund by trading on that information.
Jesse Tortora, a former analyst, was also part of the “criminal club” of fund managers and analysts, who exchanged illegal tips.

The agreement between Diamondback and the SEC is subject to court approval. The SEC said that the firm had also entered into a non-prosecution agreement with the U.S. criminal authorities. Tortora pleaded guilty and is cooperating with the U.S. However, Newman has not entered a plea and has been released on a $3 million bond. Prosecutors, however, found that the firm’s co-founders did not know about the misconduct, as it does not extend beyond the statement of facts.