The 37-year-old Tortora, testifying for the third day in the case against SAC top money man Michael Steinberg, said his big year at now defunct hedge fund Diamondback was 2008, when his compensation hit $2.5 million. He only made $800,000 in 2009 and left the firm that was founded by former SAC portfolio managers early in 2010. Tortora, who is living with his parents in Florida while he awaits sentencing for his cooperation in the Steinberg trial, said he has only $100,000 left from his years of living high as a hedge-fund analyst. While the financial crash decimated portfolios of millions of Americans in 2008, that was Tortora’s big year, when insider trading tips about Dell, among others, paid off. Steinberg traded on that insider tip and knew it was illegal, prosecutors allege. Tortora said he lost $400,000 day trading and “several hundred thousands” in Las Vegas on blackjack and sports betting. He said he has also spent $400,000 on legal fees since his arrest on insider trading charges. While at Diamondback, he also fed insider tips to his stepfather, who did not know they were illegal. “In general, he’s done poorly,” Tortora told the jury. “He has lost a good amount of money.” [NYP]
A while back a federal judge in New York decided that poker wasn’t illegal gambling under federal law, and we discussed it here, and so I feel a certain sense of responsibility to all of the Dealbreaker readers who quit their jobs to start poker rooms. So I should tell you that that decision was reversed today on appeal, and poker is illegal again, so you’d better shut down your poker room and go back to trading derivatives ha ha ha.
Other than that I don’t have much to say about the decision. The lower court’s decision declaring poker legal was very scholarly about how poker is predominately a game of skill, not of chance, and so is not “gambling.” But it was pretty loony on the law: poker is undisputedly illegal gambling under New York law, so the question of whether it was illegal under federal law turned on whether it’s a “gambling business which is a violation of the law of” New York. The district court said, well, it’s a violation of New York’s gambling law, but it’s not a “gambling business” under my reading of the word “gambling,” because it’s a game of skill, so you’re free to go. The appeals court ignores all the chance vs. skill stuff and just says “it’s gambling under New York law, so it’s gambling under the statute, so you’re hosed.” That’s sad but also probably right.
Here you can read Floyd Norris complaining that synthetic CDOs, and by extension most derivatives trades, are just gambling, the equivalent of a bank’s “put[ting] together a betting book and taking out the bookie’s cut.” Read more »
Should you have anything left in your InTrade account after letting it ride on Mitt Romney, disbelief in the Higgs boson and Zero Dark Thirty, you have nothing to fear: You’ll get all your money back after the former betting site successfully pursues “two substantial monetary claims against two distinct parties for an aggregate amount greater than $3,500,000.” Or not. Read more »
Like a lot of people I got an email yesterday telling me to close my Intrade account. This will not be a problem for me because:
Now I know it looks like I was terrible at predicting the election, but the real explanation is of course that I was astutely predicting the end of Intrade and managing my account to a level appropriate for that outcome. Though I assume there’ll be a $20 bank transfer fee to get those twenty cents out.
This CFTC suit is weird, huh? It’s effectively shut down Intrade for allowing US citizens to make illegal options trades, but its theory is a bit murky. One obvious thing about Intrade is that it is a little illegal to bet on U.S. elections and Oscar winners and all the other things you can bet on on Intrade, because it is a little illegal to bet on anything. This is America; you’re just not supposed to bet on things.
Except the things that the CFTC is willing to let you bet on.1 That’s a weird grab bag; you can bet on gold and orange juice and pork bellies and interest rates but not … well, not onions, but more relevantly, not elections. The CFTC is not a fan of election betting; earlier this year they rejected a request to allow trading of political event contracts on a derivatives exchange. And of course Intrade is for betting on elections, so of course the CFTC wants to shut them down.
Except that the CFTC isn’t suing Intrade for letting you bet on elections; it’s suing Intrade for letting you bet on the things that the CFTC lets you bet on. Go read the CFTC complaint; it doesn’t mention elections. The CFTC’s problems are with “binary options betting on the future prices of gold and crude oil, and changes in the U.S. unemployment rate and U.S. gross domestic product figures.” Which are just fine for betting on. Just not, it seems, on Intrade. Read more »
Senator Bob Menendez: I listen to this [hearing] and I paraphrase Shakespeare when I ask, a hedge or not a hedge, that is the question.
Jamie Dimon: [staring] Read more »
If we learned one thing from the the financial meltdown it simply is “Don’t Fuck with Quants.” Armed with their designations, degrees and Excel spreadsheets they taught us that if tested, they will bring the global financial system to its knees, so help me God. Perhaps in a quest for redemption for the entire industry, one such individual has taken his talents to Vegas, where he’s trying to create value rather than mercilessly destroy it. For those whose bonuses sucked more than some dude with his lips around Michelle Ryan’s toes, you might what to check out this kid’s site if you’re looking for a little extra scratch.
Notable accomplishments this NFL Postseason include: Read more »