I haven’t been following Fabrice Tourre’s trial all that closely but I gather that the main evidence against him is that a Goldman saleswoman, Gail Kreitman, told her client ACA Capital Management that Paulson & Co. was going to be a long investor in a CDO called Abacus. That turned out to be false, and arguably in a material and fraudy way. So: why isn’t the SEC suing Gail Kreitman? Well, because someone told her that that it was true, and there’s at least, like, a 60/40 chance that that someone was Fab. Because he was pretty competent: Read more »
The Feds Are Struggling To Understand Why Mathew Martoma Won’t Just Turn On Steve Cohen Already, God Damn ItBy Bess Levin
“We have been remarkably successful in convincing persons to cooperate with the government, and provide evidence to us, and in court of law,” SEC director of enforcement Robert Khuzami said during a press conference the day the government went public with its charges of insider trading against former SAC Capital employee Mathew Martoma. To the untrained ear, Khuzami probably appeared to be speaking to no one in particular, just sending a general message to any would-be criminals out there that once the government got to their co-conspirators, it’d be all over. No one wants to do time, and everybody flips. To those who’ve been following Operations Perfect Hedge, though, and have watched the Feds’ relentless pursuit of Steven A. Cohen, it was obvious they were sending a clear and direct message to the Big Guy: “We got ya boy, and ya goin’ down.” And since its track record of getting people to turn on their colleagues and in some cases, their best friends (see: Noah Freeman/Donald Longueuil, and these guys, and these guys, and this guy), really has been “remarkably successful,” and since Martoma has a wife and young kids and his whole life ahead of him, Khuzami and Co. probably assumed they had this one in the bag. But not so. Read more »
Earlier today, Bill Hwang, the founder of the Tiger Cub’s Asia-based branch, Tiger Asia, pleaded guilty to one count of wire fraud and agreed to fork over $44 million to make allegations by the SEC of insider trading in Chinese bank stocks go away. According to Hwang, his firm “regrets the actions for which is accepts responsibility today and is grateful that this matter is now resolved.” According to SEC director of enforcement Robert Khuzami, who we would love to consider a side job writing fables for children about foxes who trade on unreleased information about clinical trials of Alzheimer’s drugs and take advantage of innocent hens,* Hwang was a very bad boy and should serve as a cautionary tale for anyone thinking about breaking the law. Read more »
Securities And Exchange Commission Announces Plans To Keep Close Tabs On Any Moderately Successful Hedge FundsBy Bess Levin
Are you a hedge fund that’s made it a habit of doing right by your clients? Just barely justifying your fees? Doing your job? SEC director of enforcement Robert Khuzami is on to you. He knows the only way anyone could beat the market by 3 percent (or what he calls “aberrational performance”) is by being a genetic freak or criminal. So everybody just sit there with your hands in the air. You’re all suspect. Read more »
Is the SEC drowning in a wading pool of ignorance? Have no fear. The Commission is getting “…more smart
er, more swift er, more successful er….” at least if you believe Robert Khuzami, sometime federal prosecutor made SEC enforcement chief. It seems that the new focus over at the SEC will be to hire smart guys. Really smart guys. How smart? Have you ever heard of Plato, Aristotle, Socrates? Morons.
Khuzami took over Enforcement from Linda Thomsen, passer of the Ponzi buck, back in February, leaving precious few targets for ridicule at the Commission. Be this as it may, Khuzami is working hard to fill Thomsen’s shoes.
When asked if it was true that specialists and attorneys with high fees are easily bored, Khuzami revealed that “lawyers in a specialized group could be permitted to work on unrelated cases to maintain variety,” and that “It’s not about what’s broken.”
The good news is that Khuzami is due to testify before Congress next week. The sharpening of disemboweling cutlasses could be heard echoing throughout the Dirksen federal building over the last 48 hours.
SEC Plans Fraud Fight With Teams of Specialists [The Wall Street Journal]