Remember the group of old high school buddies, who put Colonia High Class of ’88 on the map when they were criminally and civilly prosecuted for an “insider trading scheme focused on pharmaceutical and medical technology stocks”? They’ve all received punishments that range from fines to prison time and that’s in spite of the fact that:

  • The phrase “I have some vacation pictures for you” was a cover for payments made to tippers
  • Deals were referred to in code as the “Fat Man,” while updates on the statuses of deals were communicated with lines like “fat man has a friend” and “fat man walks alone”
  • One of the men assured everyone that even if the Securities and Exchange Commission did catch on, they wouldn’t have the resources to do anything about it. (To wit: “The SEC’s got to pick their battle because they have a limited number of people and huge numbers of investors to go after.”

And yet! Read more »

van buren boys hand signal
Wall Street traders may be manipulating a key derivatives market and front running Fannie Mae and Freddie Mac, hurting the US-owned mortgage giants in the process, according to an FBI intelligence bulletin reviewed by Reuters. Using what Federal Bureau of Investigation agents described as “unsophisticated tradecraft,” such as hand signals and special telephone ring tones, some traders are conspiring to rig rates on large orders submitted by Fannie Mae and Freddie Mac, or front running them in the interest rate swaps market, the document says.Reuters, Jan 14, 2014

Are we thinking: Read more »

Editor’s Note: The following is a guest post by John Carney.

The former Societe Generale trader arrested yesterday on charges of stealing Soc Gen’s computer code for high-frequency trading was set to begin work this week at Tower Research Capital, a New York based quantitative hedge fund, according to a source.

Samarth Agrawal was charged yesterday with one count of theft of trade secrets, according to Bloomberg. Federal prosecutors said he made copies of the code behind Soc Gen’s proprietary trading last summer.

Agrawal resigned in November, just seven months after he was promoted to be a trader at Soc Gen. He had worked as a quantitative analyst for the bank’s high frequency trading group since 2007, according to reports.

A source familiar with the matter has exclusively told DealBreaker that Agrawal was scheduled to start at Tower Research Capital this past Monday.

“I guess he found a home for his stolen code,” the source said. Read more »