(Bloomberg) -- Joseph Contorinis, an ex-Jefferies Paragon Fund money manager convicted of insider trading in 2010, can be ordered to pay $7.2 million for profits he made for the fund from the scheme, a federal appeals court ruled.
The U.S. Court of Appeals in Manhattan today upheld a lower court’s finding in a U.S. Securities and Exchange Commission lawsuit that Contorinis must pay the money, even though the profits weren’t his. The decision may affect what others convicted of insider trading on behalf of hedge funds will have to pay in disgorgement.
“Although Contorinis did not pocket the profits from his trades, it was he who utilized the inside information, executed the trades, and secured the resulting profit for the benefit of his clients,” the court said in the 2-1 ruling.
Contorinis was sentenced to six years in prison for his role in the insider-trading scheme. Jurors found that he traded on tips from an associate director of mergers and acquisitions at Zurich-based UBS AG.
The case is SEC v. Contorinis, 12-01723, U.S. Court of Appeals for the Second Circuit (Manhattan).