CROOK ALERT!! Insider Stock Trading is Rampant
Although from time immemorial stock, commodity and currency traders have sought an "edge," insider trading, which has become more systematized than ever before, has been in the headlines a lot recently with the sensational convictions of Raj Rajaratnam of Galleon hedge fund and several of his informants most notably Rajat Gupta, a Goldman Sachs director and former C.E.O. of McKinsey & Company. More recently the investigations of Steve Cohen's SAC Capital hedge fund have grabbed the headlines, with everyone waiting with bated breath to see whether Cohen himself will be indicted. frequency trading clients.
The widespread insider information sources and practices take several different forms including industry "expert network" firms that provide information from a variety of sources to hedge fund analysts and traders. These firms are highly compensated for this information. Advance notice of brokerage firms' analysts' recommendations provided to select clients is another form of insider information. And financial pages reported this week on current investigations of another type of insider information--the sale of early financial data such as the University of Michigan's survey data by Thompson Reuters subscribers five minutes earlier than it goes to the public and five minutes, two seconds, early to a select group of high paying, high frequency trading clients.
Steve Cohen's SAC capital hedge fund in 1968 even advertised it's information gathering system's "edge," and the fund's organization was structured maximize the use of information from a variety of sources and some believe to insulate Steve Cohen from knowledge of any illicit practices. SAC acquired the reputation of being Wall Street's greatest information gathering machine. Prosecutors hope that a former SAC manager, Matthew Martoma who was indicted recently will lead directly to Steve Cohen himself. Martoma has been accused of paying Dr. Sydney Gilman, neurology profssor at University of Michigan Medical School for advance information on trials of an alzheimer's drug on which SAC with Cohen's approval made huge profitable trades. Thusfar, Martoma has refused to help prosecutors nail Cohen. SAC paid $615.7 million in an unsuccessful attempt to make the case go away. Meanwhile the SEC continues to squeeze Matthew Martoma to get him to cooperate in it's effort to indict multi-billionaire Steve Cohen.
7-26-13NYTimes--"SAC Capital Arraigned on a Raft of Criminal Charges"
- SAC Arraigned on a Raft of Criminal Charges
In a brief proceeding in Federal District Court in Lower Manhattan, the firm was arraigned on a raft of criminal insider trading charges, making it the first large company to face an indictment in more than a decade. ["Corporations are people."]
7-25-13NYTimes--SAC Indicted for Fraud!!! And Called a "Magnet for Cheating"
Federal authorities, under fire for treating Wall Street with kid gloves, have delivered a crippling blow to one of its most successful firms, SAC Capital Advisors, whose outsize trading profits have drawn government scrutiny for more than a decade.
7-25-13NYTimes--A Show of Force in Case Against SAC Capital
- Justice Department Lowers the Boom on SAC Capital
Instead, after years of futile attempts to pin criminal charges on Mr. Cohen, the investigators were coalescing around a more unusual plan: indict SAC itself.
7-22-13NYTimes "Government's Case Reveals Cohen Links to Dubious Behavior by SAC Employees
- Case Reveals Cohen's Links to Dubious Actions at SAC - NYTimes.com
In a detailed legal filing, the S.E.C. uses phone records, e-mails and instant messages to paint Steven A. Cohen as a boss deeply engaged in his employees’ questionable behavior at SAC Capital Advisors.
7-13-13NYTimes--"Fair Play Measured in Slivers of a Second" James B. Stewart
- Fair Play Measured in Slivers of a Second - NYTimes.com
Regulators are taking a second look at media companies that try to generate revenue by charging fees for early access to financial information.
7-8-13NYTimes--Regulators Consider Sales of Early Financial Data
- Regulators Examining Sales of Early Financial Data - NYTimes.com
The New York attorney general is looking into early release of data after Thomson Reuters announced that it was suspending an early release of a consumer confidence survey to clients who paid extra.
3-15-13Reuters--SAC to Pay $615.7 Million to Settle Insider Trading Charge
- Cohen's SAC to pay $616 million in SEC insider trade settlement| Reuters
(Reuters) - Hedge fund titan Steven A. Cohen's firm is paying $615.7 million to settle charges that it improperly traded in two stocks, in what is the largest-ever, insider trading settlement, U.S. securities
June2013VanityFair "The Hunt for Steve Cohen"
- Is Hedge-Fund Titan Steve Cohen Going Down? | Vanity Fair
Bethany McLean and Bryan Burrough investigate U.S. Attorney Preet Bharara’s seven-year look at an insider-trading scandal that has SAC Capital co-founder Steve Cohen at its center.