[ by Melanie Gretchen ]

An insider trading informant traded on information of insider trading for a "Get out of jail" free card.  A federal judge in Manhattan granted the former hedge fund manager 2 years' probation and forfeiture of his alleged ill gotten gains.  Steven Fortuna, 50, was discovered by the government in 2008 during its investigation of hedge fund Galleon Group, whose founder, Raj Rajaratnam, is serving 11 years of prison for insider trading.

Fortuna was a sell-aside analyst of technology companies after graduation from Columbia Business School in 1993.  In 2008, he helped launch hedge fund S2 Capital LLC, according to the sentencing memo.  While at S2 Capital, he obtained insider information about technology companies including Akami Inc and chip manufacturer Advanced Micro Devices Inc.

It should be noted that Fortuna is the second recent insider trader to make out without jail time.  Former SAC Capital Advisors analyst Wesley Wang also traded his assistance for probation, instead of jail.  It should also be noted that Fortuna did better than Intel executive Roomy Khan whose assistance still landed her 2 years in jail.

What did Fortuna do right?  Like Wang, Fortuna agreed to help the government immediately – within weeks of being approached in 2009.  Like Wang, he was able to record more than 400 conversations for the FBI.  With his information, the government secured the convictions of Danielle Chiesi, a former portfolio manager with hedge fund New Castle Partners, and Robert Moffat, a former IBM executive.  Certainly, the amount Fortuna forfeited, $200,000 is worth getting out of jail.

For further details, go to [Reuters, 2/13/13] and our Perspectives story [Insider Trading: Help Prosecutors or Don’t Get Caught].