Every publication today ran a story about how SAC investors are harrumphing around about pulling all their money out of SAC since the words “SAC” and “insider trading” seem to keep showing up in the same sentence and that sentence is sort of miscellaneously bad. Here is my favorite harrumph:
“Patience will be wearing thin among some investors after this latest accusation,” said Vidak Radonjic, managing partner at Beryl Consulting Group LLC in Jersey City, New Jersey, which advises clients on investing in hedge funds. “There is a pattern of potential compliance breaches and the money involved is getting bigger.”
I say unto you, the operative phrase there is “the money involved is getting bigger.”1 And I ask also unto you: if you were a passive investor in a hedge fund, and you found out and/or strongly suspected that your hedge fund was insider trading successfully, what would you do? I know what I’d do! You probably know what I’d do too.
Here is a hypothesis that may or may not be consistent with the facts: Read more »