Quick Defense in Insider Trading Trial of 2 Hedge Fund Managers

Defense lawyers for two former hedge fund managers called two witnesses before resting their case, a surprise decision that will send the insider trading trial to the jury as soon as Tuesday.

In one of the largest prosecutions by the government in its broad insider trading investigation, Anthony Chiasson, a co-founder of the now-defunct Level Global Investors, and Todd Newman, a former portfolio manager at Diamondback Capital Management, are on trial in Federal District Court in Manhattan on charges that they were part of a conspiracy that made about $68 million illegally trading technology stocks.

After more than three weeks of testimony, the prosecution rested, setting the stage for the defense to begin its bid to keep Mr. Chiasson and Mr. Newman out of prison. There was chatter that the defendants might testify in their own defense.

But after Mr. Newman’s lawyer called an F.B.I. agent to the stand for brief questioning about the government’s investigation. A professor of finance and economics also opined on Mr. Newman’s trading patterns before the defense rested. Judge Richard J. Sullivan, who is presiding over the trial, set closing arguments in the case for Tuesday.

The decision to not put on a substantive defense is a calculated risk aimed at signaling to the jury that the defense believes that prosecutors do not have a strong case.

“There is always a gamble because the jury most likely anticipates the defendants will put up a robust defense,” said Jacob S. Frenkel, a former federal prosecutor. “But they always hammer away at the government’s failure to meet its burden of proof.”

The defense’s legal team is led by Reid Weingarten of Steptoe & Johnson for Mr. Chiasson and Stephen Fishbein of Shearman & Sterling for Mr. Newman.

The trial of Mr. Chiasson and Mr. Newman is concluding amid renewed interest in the government’s insider trading inquiry.

Last month, federal prosecutors charged a former portfolio manager at SAC Capital Advisors with illegal trading in the stocks of the two drug firms Elan and Wyeth, which allowed the fund to earn profits and avoid losses totaling $276 million. For the first time in an insider trading case, Steven A. Cohen, the billionaire founder of SAC, one of the largest hedge funds on Wall Street, is linked to the trades that prosecutors say were illegal. He has not been charged with wrongdoing.

Since 2009, Preet Bharara, the United States attorney in Manhattan, has secured 69 insider trading convictions against hedge fund traders, corporate executives and lawyers.

Juries have not been kind to the defendants. Most of the defendants have pleaded guilty. Of the nine who took their cases to trial, all have been convicted.

The government’s case against Mr. Chiasson and Mr. Newman in part grew out of the F.B.I.’s raid in November 2010 of Level Global and Diamondback. About a year later, prosecutors charged Mr. Chiasson, Mr. Newman and six others with participating in a “tight-knit circle of greed” that earned illegal profits by trading in the technology companies Dell and Nvidia. Six of the eight have pleaded guilty, including Jon Horvath, a former analyst at SAC.

Both Level Global and Diamondback were founded by former employees of SAC. Level Global closed shortly after the F.B.I. raid. Diamondback announced last week that it was closing its doors.

The prosecution’s case against Mr. Chiasson and Mr. Newman, which lasted about a month, was built around the testimony of two of the former traders who pleaded guilty: Spyridon Adondakis, who worked for Mr. Chiasson at Level Global, and Jesse Tortora, who was under Mr. Newman’s direction at Diamondback.

Mr. Adondakis and Mr. Tortora each testified that they had received secret financial information about the computer company Dell and passed it along to their bosses. During opening statements and on cross-examination, the defense lawyers attacked the witnesses’ credibility. They have depicted the witnesses as government cooperators who are scapegoating their bosses in the hopes of receiving a lenient sentence.