On the one hand, it’d be hard to argue that the former hedge fund manager doesn’t want to get out of the correctional facility he’s been in since December 2011; on the other, let’s not forget that prison is said to agree with him and that he not only is he in “good spirits,” but looks better than ever. Read more »
You’re only guilty of criminal insider trading, in America,1 if:
- you trade on information that is material and nonpublic, and
- some other stuff.
The other stuff is mostly stuff that only a lawyer could love, but man do they love it. It consists most importantly of the rule that the person who gives you the material nonpublic information needs to have done so in breach of some duty to keep the information secret and in order to get some personal benefit for himself. If a stranger just wanders up to you and says “I’m the CEO of Smerbafife and it’s a giant fraud, gotta go,” and you trade on that: you’re probably good.
This doesn’t help very often, though, since the personal benefit for the tipper doesn’t have to be an explicit bribe, or an explicit anything; just a desire to spice up your friendship with some material nonpublic information can qualify.2 (Also: usually there are bribes. You start with casual venting of frustrations and the next thing you know you’re accepting bags of cash in parking lots.)
It’s A Slippery Slope From Bitching To A Friend About Not Getting Skinny Fast Enough On A Company’s Weight Loss Shakes* To Passing Material Non-Public Information About Said Company To Said Friend, Scott London Can Tell You That MuchBy Bess Levin
CNBC: How did this happen? London: Oh, just through discussions and dinner and so forth…I might say something casual about frustrations at a certain client…and the other individual traded off that, unbeknownst to me. And then he brought it to my attention and then started asking questions and said “Hey, well what’s this company doing, what’s that company doing,” and unfortunately I gave him the information. I never once asked for any money. CNBC: But you didn’t turn it down. London: That’s correct. Read more »
If you’ve been really closely following the SAC-Diamondback-expert-network-etc.-etc. insider trading investigations you might be able to keep the players straight but it’s beyond me. I have a hard enough time keeping one list of their prison sentences. The SEC’s new case against Whittier Trust and Victor Dosti really ought to come with a flowchart:
During at least 2008, a Dell employee (the “Dell Insider”) passed material nonpublic information regarding Dell to Sandeep Goyal (“Goyal”), an analyst at a New York-based investment adviser who had previously worked at Dell. … Goyal, in turn, passed this material nonpublic information to Jesse Tortora (“Tortora”), who at the time was an analyst at the investment adviser firm Diamondback Capital Management, LLC (“Diamondback”). … Tortora, who was a member of a group of hedge fund analysts who regularly shared material nonpublic information regarding technology companies, passed the material nonpublic information that he received from Goyal to other members of the group, including [Whittier Trust employee Danny] Kuo. … Shortly after receiving the Dell inside information from Tortora, Kuo communicated the information to Dosti.
Oh what the heck here’s a flowchart:
I guess that wasn’t so hard. Read more »
Attention New York Area Real Estate Brokers, Auction Houses: Steve Cohen’s Stress-Shopping Spree May Have Years Left To RunBy Bess Levin
The conventional wisdom on Wall Street is the clock is running out for U.S. prosecutors to make a case against billionaire trader Steven A. Cohen and his hedge fund SAC Capital Advisors after years of investigation…But continuing investigations into allegations of insider trading in at least two other stocks, which were first reported by Reuters in December, could extend the deadline to file charges for three more years, according to people familiar with the SAC probe. [Reuters, earlier, earlier]
Badin Rungruangnavarat knows what we’re talking about. Read more »