Yet another member of the insider trading ring alleged led by David Pajcin and Eugene Plotkin has pleaded guilty. You remember this one right? It’s the plot where the plotters seemed to put together a “greatest hits” albumn of every insider trading scheme of the past three decades to hatch their own private world-wide conspiracy. All for a total gain of the awesome sum of, uhm, less than $7 million.
The latest plea comes from one of the most elaborate parts of the plot. Nickolaus Shuster actually moved to Wisconsin to take a job at the plant where Business Week is printed in order to pass information on to his co-conspirators. Business Week, of course, is one of the traditional go-to places for insider trading. Several times over the last few decades, people have been prosecuted for trading on information obtained from advanced copies of Business Week.
All told, though, the entire infiltration scheme seems only have resulted in the plotters making one trade on one stock, for a profit of what we’re told was less than $400,000.
Note to would be insider traders—this particular trick seems to have run its course. Just because some folks made money off it in the past, doesn’t mean it’s going to work for you. Or, as we say, past performance does not guarantee future results. Stealing Business week is officially over.
Printing plant worker admits to insider trading [Reuters]
insider-trading
Bruce Carton over on Securities Litigation Watch points out that the latest issue of Fortune magazine has an article on our favorite (alleged) Insider Trading scammers. It’s got everything! Juicy details from the SEC interview with David Pajcin to the first ever media interview with Eugene Plotkin. Hotness.
The article states that in response to the SEC’s question, Pajcin
admitted advising many of the people involved in the case to buy Reebok, but only because he thought the stock was a bargain, not because he knew anything about a pending merger.
Plotkin held forth for the better part of seven hours on that subject, talking at mind-numbing length about the metrics he said he had applied to the stock. The SEC’s Black then summarized this at length, concluding, “Have we covered all the components of your analysis with respect to Reebok specifically that you can remember, sitting here today?”
Pajcin added a few things: “The correlation of volatilities, historical and implied in terms of the S&P and just a general strong dropoff in the five-day volatility, making new highs, so those are all things I look at.”
Pajcin might be a crook but at least he’s a crook whose got nonsense financial speak down cold.
Alleged crook. Whatever.
Fortune Article: “Partners in Crime” [Securities Litigation Watch]
Well, we guess it’s nice that the SEC is considering today letting Senate investigators interview SEC staffers about the allegations that it fired an investigator looking into insider trading allegations at Pequot Capital when his probe started towards Wall Street’s highest echelons. All along we’ve thought that everyone involved wasn’t treating these allegations seriously enough—the Senate committee charged with overseeing the SEC seemed to take a pass, the SEC barely even shrugged it off and most media outlets haven’t paid enough attention to the story. Especially after the Senate judiciary committee finally brought in the fired SEC investigator, Gary Aguirre, and the allegations were made under oath and penalty of perjury, the charges deserved better than the treatment they initially received.
A few weeks ago, Senators finally started paying real attention to the charges but the SEC stalled, saying it needed the full commission to vote on whether the Senate could look into the charges. If the SEC does anything but vote to fully comply with a Senate investigation, it will be time for the President to become involved. Perhaps the Justice Department needs to appoint a special prosecutor. You wouldn’t think that these were the kind of charges the SEC would want to investigate internally—not if it wants to retain any credibility. But then you don’t work for the SEC.
SEC May Vote On Sharing Hedge Fund Probe Info With Sens [Dow Jones Newswire]
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Martha Stewart Keeps Today Show Promise: Cops a Plea with the SEC
By John Carney
Looks like Martha wasn’t kidding around when she told the Today show that she was close to a settlement with the SEC two months ago. Today news broke that the home-maker media mogul settled an insider trading probe by agreeing to pay $195,000 and to be banned from serving as a director, CEO or financial officer of a public company for five years.
Stewart had been convicted of lying to federal prosecutors in a related investigation into 2001 sales of ImClone stock. Her Merrill Lynch broker, Perter Bacanovic, also settled with the SEC, agreeing to pay $75,000.
WIth the ImClone case finally behind her, Martha can get back to giving her full attention to being annoyingly well-organized about more important matters like holiday cookie recipes. And, to be fair, running a media company based on those recipes.
Martha Stewart to Pay $195,000 to Settle SEC Probe
[Bloomberg]
We’ve been spending some time trying to clear away the murk and shine some light into the shadows of Jeffrey Epstein’s financial dealings in an effort to provide some, uhm, actual financial reporting related to the sex candal encircling the mysterious money manager. There’s not much that is publicly available but we’re still digging.
What we have discovered, however, is a brief document amending a credit agreement for RELIANT PHARMACEUTICALS, INC. The amendment replaces the administrative agent for the credit. But what caught our eye was the confluence of three DealBreaker subjects all in the same documents.
The signature pages include lines for Morgan Stanley CEO John Mack, who is scheduled to appear before the SEC in connection with allegations of insider trading at Pequot Capital, as well at Jeffrey Epstein, who signs as trustee of the Wexner Children’s Trust II, part of the financial empire of The Limited founding family. And the agent who is being replaced? Goldman Sachs, where alleged insider trading crooks Eugene Plotkin and David Pajcin worked (not to mention the alma mater of that other DealBreaker obsession, Hank Paulson).
Now this is no doubt just a coincidence, and not really a conspiracy to make our heads explode. We should probably just take a deep breath and then post a Venn Diagram illustrating the connections but our diagramist is in meetings off-site.
One additional thought: this is probably the last time you’ll see Epstein’s name coupled with the words “trust” and “children” any time in the near future.
Reliant Consent, waiver and amendment [SEC]
David Anderson is a constant disappointment when it comes to insider trading. In the first place, the former LendingTree senior vice president apparently didn’t grab any money for himself. Second, he allegedly tipped off his girlfriend. (Do women still go for the whole stock-tip seduction thing anymore?) Third, she made something like less than $8,000 from his tip that IAC/InerActiveCorp was going to acquire LendingTree.
And now he doesn’t even fight the charges. Word comes today that he’s agreed to plead guilty to making false statements to the SEC. This isn’t even proper insider trading. It’s Martha Stewarting–getting caught for lying when questioned by the feds. Oh well. He’ll have up to five years in some white collar prison to consider exactly where he went wrong.
Former LendingTree exec to plead guilty [Charlotte Business Observer]
Earlier on DealBreaker: Itty Bitty Insider Trading.
Someone has done us all the enormous favor of resurrecting the trailer to “In Your Wildest Dreams”—a low-budget, straight-to-video film from the early nineties that tells the story of a high school senior who strikes it rich on the stock market by accidentally purchasing an under-performing tech stock. Soon he finds himself embroiled in an insider trading investigation and pursued by an unscrupulous trader dressed in full-out Gordon Gekko-fabulous fashion. It’s a bit, well, lessony for our tastes–almost a financial version of reefer madness movie–but the trailer also has some very fun moments.
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