Which may or may not have something to do with someone hitting the jackpot this weekend/having big money riding on June’s Belmont Stakes. Come on Itsmyluckyday, daddy needs a new source of income/money to cover up to $250,000 in fines! Read more »
California Jeweler Who Traded A Rolex, Unmarked Envelopes Of Cash For Inside Information Re: Herbalife, Skechers In Pretty Good Spirits For Someone Who Just Plead Guilty To Felony ChargesBy Bess Levin
What is the point of prosecuting a company? Sometimes they pay fines, that’s something. A criminal conviction against a company may keep that company from doing bad things in the future. As a prosecutor, you get to say “this prosecution proves that no company is too big to jail,” despite the fact that a company is the exact and literal embodiment of a thing that is too big (and too abstract) to jail. So, there’s some stuff.
The point of prosecuting a human is to punish that human for doing bad stuff and deter other humans from doing similar bad stuff in the future, and prosecuting companies doesn’t do a great job of that. Prosecuting companies tends to both over-deter and under-deter: “if I commit a crime in my corporate capacity, my company will disappear and I’ll be out of a job” doesn’t have quite the same sting as “… and I’ll go to prison,” though it does have exactly the same sting as “if someone else at this company commits a crime in his corporate capacity, my company will disappear and I’ll be out of a job.”
Is (or was) SAC Capital organized to encourage individual analysts and portfolio managers to get inside information while shielding Steve Cohen from direct knowledge of that information? Meh, I don’t know, but man do a lot of people think so.1
Was that kind of what its investors wanted? Even today you can read about how investors are voluntarily fleeing SAC, or planning to, because “[e]ven Cohen’s legendary 25 pct annual returns at some point aren’t worth the risk,” but still: what risk? “At least nine current or former SAC employees have been linked to insider trading while working at the firm, including four who have pleaded guilty to crimes, according to Bloomberg News’s tally.” I submit to you that if you don’t want to be associated with insider trading, six cases would be enough. If nine isn’t enough, ten won’t be either. It seems like at least some investors are only going to be dragged away from SAC by force.
Are you as puzzled as I am by the mild brouhaha over the CFTC’s new swap execution facility rules? Basically the rules require that most swaps be traded on pseudo-exchange-y-type things called “swap execution facilities,” which are run either by an order-book system or a “request for quote” system. The RFQ system would require anyone wanting to trade to send an RFQ to at least 3 (2 for “an initial phase-in period”) potential counterparties. The original proposal was for that to be five counterparties. The revised proposal has caused a striking amount of rage, as various people have confused themselves into thinking that of course it’s obvious that every transaction should be an auction among five potential counterparties. Presumably few of those people orient their daily life that way. I don’t, anyway; I get lunch at Chipotle every day because it’s next door to Dealbreaker HQ.1
On the other hand people who think that customers should choose how many quotes to get don’t like the 3-quote compromise either. Here’s a SIFMA guy whining about it, and he doesn’t seem all that wrong:
SIFMA’s Asset Management Group continues to believe that any minimum-bid requirement will tie the hands of portfolio managers who already have a fiduciary obligation to serve the best interests of their clients. Requiring portfolio managers to broadcast their trading position more widely than they would otherwise choose could negatively impact the prevailing price of their trades, making it more expensive and difficult to hedge their clients’ risk. SIFMA strongly believes that professional investment managers, and not the government, should determine appropriate trading strategy.
The thing that trading is is, deciding how broadly to expose your order. Wider exposure gets you more and potentially better bids, but at the risk of getting front-run or picked off or otherwise abused.2 I realize that I won’t persuade everyone by quoting a trading textbook but here: Read more »
SAC Capital Will No Longer Provide Investors With Updates On Its Unconditional Cooperation With The Government’s Investigation, Which Oh, By The Way, Ain’t So Unconditional AnymoreBy Bess Levin
SAC Capital Advisors, the hedge fund owned by the billionaire investor Steven A. Cohen, told its investors on Friday that it was no longer cooperating unconditionally with the government’s insider trading investigation. “In the past we have tried to be as transparent with you as possible about the state of the investigation while balancing our desire for transparency with the need to keep the details of a sensitive investigation confidential,” said the letter. “While we have in the past told you of our cooperation with the government’s investigation our cooperation is no longer unconditional and we do not intend to give updates in this area going forward.” [Dealbook]
Everybody, stop what you are doing: Jim Cramer is talking.
I spend an awful lot of time trying to figure out what makes sense to cover in terms of trying to help people — and what doesn’t make sense. I do it because one of the things that makes me valuable is the perspective I bring as a former hedge fund practitioner. I particularly like to highlight when something is irrelevant or confusing when you hear it.
But enough about me, kinda. Read more »
For many people, prison is a terrible place that breaks their spirit and turns them into a shell of the person they once were. They grow bitter. They harden. Their looks take a hit. Two people for whom time in a correctional facility actually seems to have served them quite well? The currently incarcerated Raj Rajaratnam, who is said to be in quite “good spirits” and looking fantastic, to boot, and the recently released (early for good behavior) Danielle Chiesi, who looks GOOD and feels GREAT. Read more »
Bernard Madoff once had billions of dollars, but now he makes $40 a month doing menial prison labor. “I used to work as a clerk in the commissary, and now they have me taking care of the telephone and the computer systems,” said Madoff, speaking by phone from a federal prison in North Carolina. His prison phone account didn’t have any money in it, so he had to call CNNMoney collect. As far as the computers and phones go, Madoff said he has to “make sure they’re working and they’re kept clean,” but he emphasizes that this requires no technical skill whatsoever. [CNNMoney]