Insider Trading Fest(ivus) 2010

  • 22 Nov 2010 at 1:47 PM

Who Will Be Next?

In the last hour, three hedge funds have been raided by the FBI– Level Global, Diamondback Capital, and Loch Capital. According to federal authorities Insider Trading Fest(ivus) 2010 may turn out to be the biggest scandal to (and this is a paraphrase) “rock lots of people’s worlds,” the assumption being that there will be many more bodies. Annoyingly, however, the government is refusing to give any hints as to who’s going down next. And we can’t take the suspense! Read more »

  • 22 Nov 2010 at 1:27 PM

FBI Raids Loch Capital Management

Says the Journal. Read more »

  • 22 Nov 2010 at 12:32 PM

WSJ: FBI Raids Level Global And Diamondback Capital

Greenwich-based Level Global, which manages around $4 billion, was founded in 2003 by former SAC Capital trader David Ganek. Stamford-based Diamondback, which was founded in 2005 and manages over $5 billion, is headed by SAC alum Richard Schimel and other former SAC managers).

Diamondback has not had anything to say publicly about the matter, while a Level Global spokesman issued this nonchalant statement: Read more »

As you may have heard, the FBI has something exciting planned for the holidays this year– Insider Trading Fest(ivus) 2010. Capping a three year investigation, charges that “could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation” are said to be coming any time between now and early next year. So far the Wall Street name that’s gotten the most press– not because they’ve done anything wrong but because people love to hate on the beautiful– belongs to a hedge fund headquartered in Stamford, CT. But who are the others that may have accusations of wrongdoing laid on their asses? For one, some employees of Goldman Sachs. But lest you worry about waking up to Lloyd Blankfein being escorted out of 15 Central Park West wearing only his HLS sweats, fear not– apparently those being probed at GS are a bit lower on the totem pole. Read more »

Last January, analyst Jonathan Hollander’s name was mentioned as possibly having a connection to a Blackstone insider trading case, based on information presented to the government by his former employer, SAC Capital-owned CR Intrinsic. Not much has been heard about Hollander since then, but this morning Reuters‘ Matthew Goldstein reports that he’s actually in the super fun position of waiting to find out if federal authorities still have a problem with him.

One individual sitting on the prosecutorial bubble is former SAC Capital Advisors analyst Jonathan Hollander, who last worked for Steven Cohen’s $12 billion hedge fund in November 2008. Federal authorities have linked Hollander to several allegations of insider trading in both court filings and testimony at a recent criminal trial, but he has not been charged with any wrongdoing. Reuters has learned that prosecutors disclosed for the first time in August that they had taken at least two confidential statements from Hollander at some point over the previous 18 months.

Prosecutors disclosed the Hollander “proffer statements” in an August 25 letter to lawyers for former Jefferies Group Inc hedge fund manager Joseph Contorinis, who was convicted by a federal jury of insider trading in October.

Read more »

So! As previously mentioned, federal authorities are wrapping up a little project they’ve been working on for the past three years involving alleged insider trading, hedge funds, that sort of thing. The government claims the probes could “eclipse the impact on the financial industry of any previous such investigation” and that charges may come before the end of this year and perhaps as early as this week. Naturally it’s unclear as to exactly who the Feds are hoping to name as participating in the passing or receiving of material, non-public information but some educated guesses can be made, based on the accosting of one analyst, Jonathan Kinnucan.

Kinnucan, the founder of boutique firm Broadband Research LLC, was “sipping wine on his front porch in Portland, Oregon” when two men in suits popped out of a gray sedan and quite aggressively accused him of sharing inside information with his clients (hedge and mutual funds, mostly). They threatened to arrest him but then, changing to a friendly tone, suggested that things could be made better for Kinnucan if he did them a favor. “We think you can help us,'” he recalls. “There is this guy in particular we are after,” he remembers them saying. “We want you to have a conversation with him and record it.” Read more »

Opening Bell: 11.22.10

US Pursues Sweeping Insider Trading Probe (WSJ)
Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according to people familiar with the matter. The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.

Ending Banks’ `Disco Inferno’ Will Involve Errors, Haldane Says (Bloomberg)
“Chuck Prince’s disco inferno causes murder on the dance floor,” said Haldane, who is the Bank of England’s executive director for financial stability. “The case for policy action may have grown over recent decades as competition in banking, and associated externalities, have intensified.”

US Banks Face $100 Billion Capital Shortfall On Basel (FT)
The top 35 US banks will be short of between $100 billion and $150 billion in equity capital after the new Basel III global bank regulations are imposed, with 90 percent of the shortfall concentrated in the biggest six banks, according to Barclays Capital.

Ireland Bailout Gets Lukewarm Welcome (WSJ)
The Irish government Sunday said it had formally applied for tens of billions of euros in aid from the European Union and the International Monetary Fund. The EU and the IMF indicated the money will be forthcoming, pending negotiations on the steps the government will have to take to restructure its debts and cut its budget deficit.

Criticism Hinders Fed Plan (WSJ)
The criticism “has raised questions about the Fed’s ability and resolve to control the yield curve,” said Mohamed El-Erian. “The criticism has unsettled markets naturally inclined to worry about the politicization of the Fed and its loss of autonomy,” he said.

Soros Gold Bubble Expanding as ETPs Hold 9 Years of U.S. Output (Bloomberg)
“People who are selling gold here are making a big mistake,” said Michael Pento, a senior economist at Euro Pacific Capital Inc. in New York who correctly predicted gold’s highs the past two years. “The gold bull market will end when real interest rates become positive and we’re very far away from that. The Fed believes it’s going to have to print more money to keep real interest rates from rising and rescue the economy.” Read more »