Ali Far and Choo Beng Lee, the former hedge fund traders turned government informants in the Galleon insider trading case, have admitted to engaging in illegal insider trading for many years, according to their cooperation agreements.
In the case of Lee, the agreements suggest that he engaged in illegal insider trading while working at Steven Cohen’s SAC Capital, the Connecticut-based hedge fund.
In the case of Lee, the alleged wrongful conduct dates back as far as 1994. In both cases, this would suggest the men engaged in insider trading while working at other hedge funds before setting up their own fund, Spherix Capital, in 2007.
Here is the relevant section of Lee’s agreement (which, oddly, sounds like something we might write in referring to the mothership– “a certain hedge fund located in Connecticut.” Also, and this is surely a coincidence, we’ve been told SAC’s president is out of the country until Monday. So, it falls to someone else– YOU KNOW WHO YOU ARE– to call us and defend a certain someone’s honor):
Having just written a book on the subject (When Mooks Fail, currently #15 on the Amazon.com best-seller list), Charlie G. continues his intrepid reporting on the utter shamelessness of Wall Street.
Now, Tom Maheras, the former Citigroup president, is hardly the only person who proves that, no matter how much you lost on subprime bets, you can still raise $100 million for a hedge fund. But Chazzie reports that, despite being forced out at Citi two years ago for obvious reasons, Maheras is basically still working for the firm.
Yes, he’s been accused of being the ringleader of the latest alleged insider trading scam, and could conceivably go to prison, but on the bright side a) he’s been recognized as a leader in the field and b) for his achievements, been given a pretty great nickname:
SEC says it has caught “Octopussy.” SEC enforcement boss Khuzami says that’s what people called Zvi Goffer because “he had his arms in so many insider” trading schemes.
Here at Dealbreaker we like to get to know our accused criminal subjects on a more personal level. Obviously, this involves checking them out on Facebook. While the supposed ringleader of the today’s scam, Zvi Goffer, has yet to accept our friend request, Emanuel Goffer (Zvi’s younger brother), one of the fourteen lucky ones charged today, helpfully counts himself among one of the last five people on earth with completely public profiles (at least for the next few minutes or so). EG’s interests include “Wall Street, Money, Trading, Steak,” his favorite quote is one by Warren Buffett that goes “It takes 20 years to build a reputation and five minutes to ruin it– if you think about that, you’ll do things differently,” and he’s a member of the group “Traders who need a hug.”
Pouting all the way, MF Global plans to reincorporate in the U.S., abandoning Bermuda for Delaware.
The futures brokerage, formerly part of the Man Group, has recently been whining a whole lot about how unfair and anti-competitive all of those billions in U.S. government bailout bucks to banks have been. We do not necessarily disagree. But such gripes about competitive disadvantages are pretty rich coming from a company based in Bermuda, and for all of the right reasons, we’re sure.
“We want to operate in a regulatory environment that benefits from the regulatory reforms discussed in Washington,” MF CEO Bernard Dan said. Plus, Delaware has recently been named the bestest damned tax shelter on God’s green earth, while Bermuda seems intent on driving out all of its financial firms with potentially ugly new taxes.
The good old days are back, at least for traders at investment banks. Little more than a year after the credit/economic crisis that was supposed to have changed Wall Street forever, I-bankers are set to be rolling in dough come bonus season, if their firms are lucky enough to have paid back Uncle Sam for his help in, you know, surviving.
And in a major reversal from just a few years ago, alternative investment pros will be worse off, not only than their I-banking peers, but even compared to their own sorry bonuses from last year, despite the big returns many hedge funds and private equity firms have enjoyed in 2009.
The Johnson Associates survey predicts that investment bankers will, on average, get a 40% fatter bonus check this year. But before you M&A guys start pricing Maseratis, the news on the Street is not all good. Those bigger bonuses will be going almost exclusively to traders, with bond traders getting between 50% and 60% more than last year, and equity traders getting between 40% and 50% more. Indeed, if the words “fixed-income” or “equity” is not in your title somewhere, you’re probably going to have to make do with less than last year.
Commercial bankers? Expect between 5% and 10% less. M&A advisers? 10% to 15% less. Asset managers, hedge fund guys and buyout kingpins? Cancel Christmas.
No one (not currently on payroll in Charlotte) wants to be CEO of Bank of America. That much is obvious. Not Ken Lewis, not anyone. Included in that group of people: Bank of New York Mellon Robert Kelly. And yet, despite having their calls forward to The Rejection Line, several times at this point, BAC seems to be having some difficulty getting the message. Concluding that brain trust down south would not fuck off and leave him alone unless a more direct approach was taken, the Kelly shot the team this message:
From: Robert P Kelly
To: Operating Committee
Date: 11/04/2009 02:00 PM
Subject: Bank of America Speculation
—————————————————–
There have been some press reports this week that say I might be interested in the CEO job at Bank of America. I want to be clear: I am not interested.
Frankly, the Wall Street Journal got it right when they said I wouldn’t leave because our company is well positioned with a very bright future. I couldn’t agree more. I look forward to crafting the future with you.
Bob
In related news, BAC consumer banking chief Brian Moynihan, feeling the need to come to the firm’s defense, since no one else will, has made the bold claim that this is a dream job a million girls would kill for, himself included.
“Anybody would want this job, it’s one of the best jobs in the business,” Moynihan told Reuters on the sidelines of a speaking engagement in Los Angeles.
Allegedly! The part about them assaulting an officer of the law, not about them being dressed as women, that’s been pretty well established (and the faded lipstick and eye make-up seen at left don’t lie). According to the Boston Herald, HBS’ers Christian Huot and Dina Mustafa Sidna were thrown out of the “Priscilla Ball” going down at Tequila Rain on Friday night for “high level of intoxication and disruptive behavior.” The girls (for the night) were not happy about that, and it was after they were told they could not go back inside (supposedly to retrieve their belongings– purses, etc) that things escalated:
After the club’s staff told police they couldn’t find any inside, the officers advised Huot and Sidani to call management the next day, cops said, but Huot and Sidani refused to leave.
Then, police said, Sidani called the cops racists, saying, “I’m a Lebanese citizen. I’m going to call the Lebanese Embassy,” while Huot stuck his arms out, saying, “Arrest me. I want you to arrest me.”
Naturally, the business leaders of tomorrow saw the potential dollar signs:
A crowd started to gather, and when one of the officers tried to escort him up Lansdowne Street, Huot allegedly grabbed him by the throat. The officers wrestled him to the ground and handcuffed him, police said, while Sidani tried to photograph them with a camera phone, saying, “This is going to get us a lot of money.”
Huot’s attorney, who represented the Craiglist Killer, is confident this can all be settled quickly, as it would be a shame to rob Wall Street of this up and coming star.
CNBC reports that the FBI has arrested seven fourteen more people “in the hedge fund industry” for insider trading. No word who the individuals are. Obviously the suspense is killing us, so if you happened to see your boss being escorted out of the building in cuffs, or knows someone who knows someone who did, get in touch. Update: The Journalnotes that the individuals were “primarily taken into custody in New York,” with one person arrested in New Jersey and one in Connecticut. Update II: Included in the arrests are employees of Galleon, the Schottenfeld Group, Incremental Capital and law firm Ropes & Gray. Update III: Some names, from Bloomberg:
Craig Drimal, who according to court documents worked at Manhattan-based Galleon, wasn’t an employee of the firm. Also arrested were Zvi Goffer, Arthur Cutillo, Jason Goldfarb, Emanuel Goffer, David Plate and Michael Kimelman. Charges against the men include conspiracy and fraud, according to documents filed in New York federal court. Names of the other seven defendants weren’t immediately available.
Big Bonuses Are Back For Many On Wall Street (WSJ)
A survey by Johnson Associates “projects that the biggest increases in year-end cash bonuses and equity awards will go to employees in rebounding businesses such as fixed income and equities. Those incentive-based payouts likely will surge by as much as 60% from last year, the survey found. In contrast, declines of 15% to 30% are projected at hedge funds, private-equity firms and prime-brokerage operations.” Countrywide ex-CEO Mozilo must face SEC fraud case (Reuters)
Orange’s request for a dismissal has been denied, despite this awesome endorsement by his lawyer: “Angelo Mozilo is an innocent man who helped millions of people find a home for more than 40 years,” David Siegel said in a statement. Goldman Benefits From Trading Bonanza (FT)
Goldman made more than $100m in profits on 36 of the 65 days in the three months to September and recorded more than $50m in profit on more than eight out of 10 trading days, a filing shows today.
ValueLine Pays $45 Million To Settle Fraud Case (NYT)
And chief executive Jean Buttner is out. UBS Gets Fewest ‘Buys’ as Analysts Fret Over Fleeing Clients (Bloomberg)
Sad trombones in Switzerland: “Of course UBS has done a lot, but outflows at the private bank continue,” said Patrick Lemmens, who helps manage about $14 billion at Robeco Group in Rotterdam, including UBS shares. “I don’t think a restructuring story on its own is enough. UBS is going to be range-bound” until outflows reverse.
State Oversight Of Some Hedge Funds Raises Red Flags (WSJ)
Because it might undermine Congress. CT AG Richard Blumenthal: “This may surprise you to hear my strong preference is for uniform national standards administered by a federal agency rather than state registration or oversight. There is clearly a need for equal treatment of hedge funds residing in different states.”
