Richard Lee

Richard Lee, the ex-SAC Capital trader who pleaded guilty to insider trading last week, was fired from a rival hedge fund over a bonus-boosting scheme that was uncovered his first day in a new job, The Post has learned. Lee was ousted from Ken Griffin’s $15 billion Citadel Investment Group in 2008 for fiddling with the trading books in a ploy to pump up his payout, sources said. What’s more, it happened during Lee’s first few hours as head of Citadel’s value special situation team, which focused on mergers, according to sources. Lee never made it to a second day. Citadel accused him of pulling profits from other trading groups to boost his own performance numbers, a source said. The 34-year-old Lee, a graduate of Brown University who lives on Chicago’s tony Gold Coast, had been promoted to head of the trading group after the former chief left in March 2008. Citadel has programs to track such changes and Lee was caught within “three hours,” sources said. In a statement, Citadel hinted at the reason for Lee’s firing, saying he “transferred positions” in such a way that it “would have impacted only his potential future compensation.” [NYP]

Richard Lee, of the SAC Capital Lees, had a “senior internet research analyst” friend named Sandeep Aggarwal (illustrated at left), who had an unnamed friend working at Microsoft, who had material non-public information re: “a Microsoft-Yahoo partnership agreement…likely to be announced in the next two weeks.” See if you can guess what happened next. Read more »

One hopes “black edge” wasn’t on the list. Anyway today’s indictment against SAC, for wire fraud and securities fraud, is a hoot:

For example, on or about July 29, 2009, a recently hired SAC PM (the “New PM”) sent an instant message to [Steve Cohen] and relayed that, due to some “recent research,” the New PM planned to short Nokia when he started work 10 days later. The New PM apologized for being “cryptic” but noted that the head of SAC compliance “was giving me Rules 101 yesterday – so I won’t be saying much[.] [T]oo scary.”

Possibly the weirdest part here is that new hires got compliance lectures two weeks before they showed up at the firm? But maybe not; the DOJ takes a pretty dim view of SAC’s hiring process generally, and if you believe the DOJ that SAC’s main hiring criterion was “is good at insider trading” then you could imagine the need for a little pre-start-date warning about email etiquette: Read more »