Managers traded on Dell tips, court told The key witness in the federal insider trading case against two former hedge fund managers testified that he passed secret information about Dell's earnings to his boss at Diamondback Capital Management who then traded on it. Jesse Tortora, the former research analyst, testified that he told his boss, Todd Newman, that his former colleague, Sandeep Goyal, had a contact inside Dell. "I told Todd verbatim what Sandy told me," Mr Tortora testified. When asked by prosecutor Antonia Apps what he told Mr Newman, Mr Tortora said: "The same thing Sandy is telling me ... I passed on to Todd and obviously [the] person worked for Dell. The testimony came on the first day in the insider trading trial against Mr Newman and Anthony Chiasson, co-founder of Level Global. Both men have pleaded not guilty. Prosecutors allege the two former hedge fund managers "crossed a criminal line" when they traded after receiving secret information about Dell and Nvidia from their research analysts. The research analysts have all pleaded guilty. Lawyers for Mr Chiasson and Mr Newman said their clients were unaware of the analysts network of insiders. Any line crossing was unknown to Todd Newman. He thought he was getting legitimate research," said Stephen Fishbein, Mr Newman's attorney. He didn't cheat. He didn't steal," he added. Reid Weingarten, a lawyer for Mr Chiasson, said the analysts acted like they were in Fight Club, referencing the Brad Pitt movie about an underground fighting group. "The first rule of fight club is there is no fight club," he said, suggesting his client did not know about the arrangement. Mr Tortora is at the centre of the alleged conspiracy. He testified that after receiving the information from Mr Goyal and another Dell insider he met through an expert network firm, which matches money managers with company officials, he passed it to Mr Newman and his group of friends. The defence is likely to argue that Mr Newman didn't know that Mr Goyal's source was a corporate insider prohibited from sharing the information. One friend Mr Tortora allegedly told was Sam Adondakis, Mr Chiasson's analyst. Mr Tortora testified he told Mr Adondakis, a friend, "about Sandy's information." Mr Adondakis "told me he passed it on to his superiors Chiasson and [David] Ganek for the purpose of trading," Mr Tortora testified. Mr Ganek, who co-founded Level Global after leaving SAC Capital, has not been charged with any wrongdoing. Prosecutors have identified him as an unindicted co-conspirator. Mr Tortora said he learnt from Mr Goyal on August 5, 2008, that Dell's gross margin would fall short of analyst estimates. He emailed Mr Newman that "gm looking a 17.5 per cent vs street at 18.3 per cent." Mr Tortora then forwarded that email onto his friends. Prosecutors showed an instant message sent by Mr Newman to Mr Tortora asking "the Dell from Sandy?" Mr Tortora replied, "y[es] on the phone with him now." Prosecutors allege when Dell announced its earnings in August 2008 the stock fell 14 per cent in one day. Mr Newman's firm, which placed a bet the stock would drop, made $2.8m while Mr Chiasson's firm, which also bet the stock would fall, made $50m.