Six Accused of Insider Trading After Wiretapping Investigation
October 18th, 2009This case is a joke—not because the people involved aren’t crooks, but because the amounts of money involved are noise level.
The Feds plucked some low hanging douche bags and put them on display for the retail investor to see as part of a confidence trick.
“Behold, retail investor, we’re using ‘powerful investigative tools’ to bust the crooks who plague our markets. Go back to sleep. Dow 10,000. Green shoots.”
Via: Los Angeles Times:
Federal authorities shook the often secretive world of hedge funds with the arrests Friday of the billionaire founder of a major New York operation and five others on charges they engaged in extensive insider trading that allegedly netted more than $20 million in illicit profits.
After taking the unusual step of using wiretaps in the investigation, authorities accused Raj Rajaratnam, the founder of the $7-billion hedge fund Galleon Group, two executives at California companies and three others of multiple counts of conspiracy and securities fraud.
It’s the biggest criminal case involving hedge fund insider trading, said Preet Bharara, the U.S. attorney for Manhattan, and is believed to be the first time that court-authorized wiretaps have been used in insider-trading cases.
“This aggressive use of wiretaps is important. It shows that we are targeting white-collar insider trading rings with the same powerful investigative tools that have worked so successfully against the mob and drug cartels,” Bharara said.
…
According to the SEC, Goel gave Rajaratnam information about Intel’s quarterly earnings and about a joint venture with Clearwire Corp., a wireless broadband technology company. In exchange, Rajaratnam made $250,000 by trading shares of Hilton and PeopleSupport Inc. in Goel’s private account at Charles Schwab, the agency alleged.
The criminal case is based partly on information provided by an informant who had traded tips with Rajaratnam. The informant has pleaded guilty and agreed to wear a wire to record conversations with Rajaratnam.
Wiretaps are expensive and time-consuming, requiring FBI agents to listen to hours of phone calls.
“You don’t see wiretaps used frequently in securities investigations,” said Steve Peikin, the former head of the securities fraud unit at the Manhattan U.S. attorney’s office. “The use of wiretaps reflects that the government thinks this is serious conduct involving a significant amount of money.”
Among the conversations recorded was a July 2008 phone call in which Chiesi told Rajaratnam that Akamai Technologies Inc. in Cambridge, Mass., was going to lower its earnings projections.
“They’re gonna guide down,” Chiesi allegedly said. “I just got a call from my guy.”
In a call a month later, Chiesi pressed Moffat to keep quiet about information they were allegedly sharing about a reorganization at Advanced Micro.
“You put me in jail if you talk,” Chiesi said, adding, “I’m dead if this leaks. I really am . . . and my career is over. I’ll be like Martha [expletive] Stewart.”
So let’s see, my local pot dealer is convinced his phone is tapped for making probably 10,000.00 a year off of pot sales (my guess- probably high number- no pun intended!) , But these f*ckers making millions to billions a year were exempt from phone taps! Do we need anymore proof of who the SEC and the FEDS work for.
And this reporter eats it up and rehashes the story to try to make it look like the SEC is finally doing something. Didn’t I just read on this site that they hired a Goldman alum to head enforcement?
Enough said….
Hah. USD $20m.
I developed my own metric after seeing up close and personal the levels of waste, fraud and abuse possible in government contracting. If it’s not $100m or more, people aren’t trying very hard. I mean, as an individual, $20m is a good haul, but for an organization?
Especially hedge funds. Hah. When major operations measure their annual profits in hundreds of millions or billions of dollars, this is even more silly by additional orders of magnitude.
Noise, just noise.