Unfortunately, this is a business, not pleasure trip: yesterday marked Day 1 of 3,285 of his sentence for orchestrating the largest insider trading scheme ever. Read more »
Over the last several years, as nearly a dozen former SAC Capital employees have been convicted of securities violations, the firm has taken many steps to redefine its image, from one of a bastion of insider trading to one where such actions are not only frowned upon but strictly prohibited. Such steps include but are not limited to: paying over $1 billion in fines; changing its name; and turning itself into a family office. Last month, Point72 Asset Management, AKA the hedge fund formerly known as SAC, even went so far as to announce that it would be monetarily compensating employees for “setting a proper tone and example on compliance and doing the right thing.” You’d think that all of these things– including the fact that a whole bunch of ex-SAC employees are doing time– would go far to deter people currently working at the hedge fund from engaging in insider trading. And yet, someone in Stamford apparently thought it was necessary still to take away one final temptation from them. Read more »
In April 2011, Wilson Sonsini Goodrich & Rosati employee Matthew Kluger was charged with insider trading with a couple of his buddies, in a scheme that went back some 17-odd years. This spooked a fellow WSG&R employee named Dimitry Braverman, because unbeknownst to the Feds, he was running a little insider trading campaign of his own, separate from Kluger’s. Despite the fact that he probably worried about having gaps in his résumé (2009-2011 Insider Trading Professional, 2011-, ???), Braverman decided to pump the brakes on the material non-public information stuff for a while, the Kluger business likely being a bit too close for comfort. About a year later, though, not too long after Kluger was handed the longest insider trading sentence in U.S. history, Braverman got that familiar itch again, an itch more powerful than any fears of getting caught, which he presumably dismissed with a “Fuck it. I’m getting back in the game.” Read more »
Ed. note: This is a new weekly column by Elie Mystal, Managing Editor of Above the Law Redline, wrapping up the week that was in law and finance. Elie is not a practicing attorney, and anything he says that you listen to can and will be used against you.
Issue #1: The $4.3 billion chat room.
The big news this week is that six firms will pay $4.3 billion to a suite of international regulators in the first set of punishments from rigging the foreign exchange market. Of course, it’s not at all clear that what Forex fixers did was that big of a deal. The Financial Conduct Authority in the U.K. says that “[t]he traders put their own interest ahead of their customers, they manipulated the market — or attempted to manipulate the market — and abused the trust of the public.” That’s lawyer-speak for “that’s not fair.” The fines amount to a $4.3 billion “unsportsmanlike conduct” penalty.
“It created an uphill battle for me,” the owner of the NBA’s Dallas Mavericks said of the nearly five-year SEC battle in private testimony obtained by The Post through an FOIA request. Cuban bid $1.3 billion to buy the Chicago Cubs in 2008, around the same time the SEC publicly accused the “Shark Tank” judge of avoiding a $750,000 loss through improper sales of Internet company Mamma.com. Cuban wasn’t selected to participate in the final bidding round for the Cubs in early 2009. He blamed the SEC for the loss in October 2009 in testimony with the commission’s then-inspector general, David Kotz, who was investigating Cuban’s allegations that the SEC mishandled his case. Cuban told Kotz that the SEC case also cost him a TV opportunity with reality TV producer Mark Burnett, known for “The Voice” and “Shark Tank.” He also said he was hurt in other ways, including getting heckled at Mavs games by kids, who stood behind him chanting “Insider trading!” [NYP]
Former SAC Capital Advisors LP portfolio manager Mathew Martoma won a delay of his Nov. 10 deadline to report to prison to begin a nine-year sentence, while an appeals panel considers whether he may remain free during his challenge to his insider-trading conviction. Martoma, 40, was convicted in February of making $275 million for SAC by using illegal tips to trade in Elan Corp. and Wyeth LLC in what prosecutors called the biggest insider-trading case against an individual. The U.S. Court of Appeals in New York today postponed Martoma’s surrender date until it considers his emergency motion for bail pending appeal. The court has yet to schedule an argument. [BusinessWeek]
Unfortunately for the ex-SAC PM, a judge was unswayed by the defense team’s promise to reveal heretofore unknown details re: its client’s innocence. Read more »