Janus produces instant messages in trading probe

* Filing discusses messages with Primary Global employees

* Janus: “not a target” in federal trading probe

 

By Ross Kerber

BOSTON (Reuters) – Asset manager Janus Capital Group Inc has provided U.S. prosecutors with communications between some of its employees and a so-called expert network firm in an ongoing federal insider trading probe, a recent court filing shows.

In the court filing, Denver-based Janus is the lone mutual fund firm that prosecutors in New York identified by name as turning over “instant message” communications between its employees and associates of California-based Primary Global Research.

Primary Global has emerged as a focal point of the government’s probe of expert networks, the newest phase in its three-year crackdown on insider trading. Since November, U.S prosecutors in New York have charged more than a dozen people who either worked for Primary Global or allegedly received inside tips from Primary Global while working for a hedge fund.

Expert network firms match hedge funds with corporate executives moonlighting as industry consultants. Prosecutors have found that some consultants have gone beyond providing industry insights and instead have sold corporate secrets to hedge funds clients.

A Janus spokesman, James Aber, said that “Janus has been assured repeatedly by the government that it is not a target of the investigation.”

Aber added: “In relation to an inquiry Janus previously reported receiving from the government, the company provided only five pages out of a total of approximately 11,000 pages of IMs that the government received between employees of other companies and Primary Global Research. This represented the sum total of IMs between any Janus employee and any Primary Global research employee. These IMs were non-substantive and innocuous.”

 

MESSAGES ON DVD

Prosecutors disclosed that they had received the instant messages from Janus in an April 8 letter to the lawyer for James Fleishman, a former Primary Global salesman, who has been charged in the insider trading investigation. In the letter, prosecutors said they were turning over a DVD with copies of the instant message communications as part of the discovery process.

The DVD, according to the letter, also contained IMs between Primary Global employees and representatives of several hedge funds including: Balyasny Asset Management, Coatue Management, SAC Capital, Diamondback Capital and Level Global Investors. Hedge funds Level Global and Diamondback were raided by federal authorities last November in connection with the insider trading probe.

A lawyer for Fleishman included the April 8 letter in a lengthy court filing on May 23. Prosecutors have charged Fleishman with conspiring to help Primary Global’s hedge fund clients get access to consultants who might pass on confidential information. Fleishman has pled not guilty.

Janus was previously identified among a group of investment firms tied to John Kinnucan, the head of an Oregon research company who famously refused to help the government in its expert-network probe late last year. Another mutual fund firm was Wellington Management of Boston, but only Janus’ name appears on the filing by Fleishman’s attorney.