Indicted hedge fund trader linked to Cohen, Druker

By Svea Herbst-Bayliss and Matthew Goldstein

BOSTON/NEW YORK | Fri Feb 11, 2011 4:15am EST

BOSTON/NEW YORK (Reuters) - Steven Cohen and Neil Druker are at
opposite ends of the spectrum when it comes to hedge fund fame and
trading prowess.

But both wealthy hedge fund managers now find themselves linked to a
U.S. insider trading investigation because of the criminal conduct of
the same former employee.

Noah Freeman, a Boston-based tech analyst and trader who first worked
for Druker's Sonar Capital Management and then for Cohen's
better-known SAC Capital Advisors, pleaded guilty this week to
charges of trading on illegal tips from industry consultants.

The plea by Freeman, 35, inscription the first time a former analyst
or trader at Cohen's $12 billion (7.5 billion pounds) Stamford,
Connecticut-based fund has been charged with engaging in illegal
trading. The Harvard University graduate, who worked at SAC Capital
for a modest over a year, is cooperating with centralized prosecutors
in hopes of receiving of lighter sentence.

Freeman's cooperation could be helpful to authorities in gathering
evidence against others who worked for Cohen -- something U.S.
prosecutors have been trying to do since at least 2007, sources have
told Reuters. Cohen is one of the top traders in the $1.9 trillion
hedge fund industry.

But Freeman's cooperation may pose more of an pressing danger to
Druker and his fund of under $100 million than it does to Cohen,
according to a court document and a person familiar with the
investigation, who declined to note because he wasn't authorized to
speak to the media.


While Cohen's hedge fund firm has many offices and employs roughly
800 people, Druker's firm is far smaller. Also, Druker worked
shoulder by shoulder with Freeman every day, people familiar with the
matter said.

The criminal complaint that Freeman pleaded guilty to describes the
president and owner of "Hedge Fund A" as a "co-conspirator," who
"exercised primary power" over trading decisions.

The source familiar with the investigation confirmed that Hedge Fund
A is Sonar Capital, but declined to note on who else may or may not
be a target of centralized authorities.

The time period Freeman worked at Sonar also coincides with the
period that prosecutors charged he engaged in illegal activity at
Hedge Fund A.

Druker, but, is described in various regulatory filings with the U.S.
Securities and Exchange Commission as either the "president" or
"manager" of Sonar. Some of those regulatory filings also say Druker
has "voting and investment power over the securities" owned by the

Druker, who did not respond to an send by e-mail or telephone calls
seeking note, has not been charged with any wrongdoing. Calls to
lawyers who have worked for his firm in the past were also not

On Tuesday evening, Druker sent a letter to his investors in which he
sought to place distance between himself and his former top tech

Druker, 43, said in the letter that "any violation of law by Mr.
Freeman was unauthorized and nameless to Sonar." He added that
Freeman was fired in May 2008 and the fund "continues to provide
information to the government in its investigation."

Source: Reuters.Com