By Sarah N. Lynch
WASHINGTON (Reuters) - Hedge fund Diamondback Capital Management will pay more than $9 million to settle civil insider-trading charges, and will also enter into a non-prosecution agreement with the U.S. Justice Department.
Under the proposed settlement with the U.S. Securities and Exchange Commission, Diamondback will give up more than $6 million in what the SEC termed ill-gotten gains and pay a $3 million penalty.
The SEC said on Monday that Diamondback also submitted a "statement of facts" to the SEC and the U.S. Attorney's Office for the Southern District of New York.
A lawyer for Diamondback had no immediate comment.
The proposed settlement, which is still subject to court approval, comes less than a week after U.S. prosecutors announced charges against seven people who worked for five different hedge funds in connection with an alleged $62 million insider-trading scheme.
Among those arrested included Todd Newman, who headed technology trading for Diamondback. Newman, along with Level Global Investors co-founder Anthony Chiasson were both accused of trading ahead of Dell Inc's earnings announcements for the first and second quarters of 2008.
Prosecutors also last week publicly disclosed that several other hedge fund employees, including former Diamondback analyst Jesse Tortora, had already pleaded guilty for their roles in the scheme.
The SEC's parallel civil case also filed last week had charged all seven individuals involved in the criminal matter as well as both Diamondback and Level Global.
Diamondback's proposed settlement announced on Monday would resolve charges of insider trading in shares of Dell and Nvidia Corp.
"We are pleased to have reached a prompt resolution of the charges against Diamondback," said George Canellos, the director of the SEC's New York Regional Office.
"If approved by the court, we believe that the proposed settlement appropriately sanctions the misconduct while giving due credit to Diamondback for its substantial assistance in the government's investigation and the pending actions against former employees and their co-defendants."
(Reporting by Sarah N. Lynch; Editing by Gerald E. McCormick and Tim Dobbyn)
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