• 17 Sep 2014 at 1:00 PM

Inadvertently Shorting Into A Deal As Gateway Crime

Mary Jo White was the top federal prosecutor in New York City during Bill Bratton’s first run as the Big Apple’s top cop, and she learned a few lessons from his “broken windows” theory: Clean a place up a little, and throw the fucking book at the street urchins who are messing things up with graffiti and public defecation and, well, window-breaking, and the city will become the safe, sterile, boring place its leaders have always wanted it to be, and the street urchins will fall in line.

So don’t tell her that she’s spending a little too much time and energy going after inadvertent violators of Rule 105 of Regulation M, which says you can’t short a stock and then buy it in a public offering. Because that’s just a start. Next thing you know, you’ll have tens of thousands of Bernie Madoffs and insider traders and “magnets for market cheaters” to deal with. You can thank her later. Read more »

I suppose in like 1985 there were people who worked on Wall Street and un-self-consciously ate cheeseburgers for breakfast, got shoeshines at their desks, went to strip clubs every night, and slammed down their phones hard enough to break them, but my assumption is that in 2013 any remaining “stereotypical Wall Street behavior” is mediated through popular culture. Some people go into finance with the goal of having a memoir that reads exactly like Liar’s Poker,1 and no one wears contrast-collar shirts because they look good. You wear them – if you do (do you?) – because you saw them in that movie.

Former Diamondback Capital analyst and insider trader Jesse Tortora actually wrote this:

In 2009, Tortora e-mailed a group that included Abbasi and Adondakis: “Rule number one about email list, there is no email list, fight club reference. Rule number two, only data points can be sent, no sarcastic comments. Enjoy. Your performance will now go up by 100 percent in 09 and your boss will love you. Game theory, look it up.”

Look it up, yo. That’s also from Bryan Burrough and Bethany McLean’s amazing Vanity Fair article on the endless pursuit of Steve Cohen, and while the fact that Tortora and his crew of cheeseballs called themselves “Fight Club” has been reported before, the fact that Tortora had to remind them of it BY SAYING “FIGHT CLUB REFERENCE” AFTER HIS FIGHT CLUB REFERENCES is new to me and makes me ashamed to be a human.

Why did these tools insider trade? Read more »

SAC Can’t Even Put Ten Days Of Insider Trading Behind It

Once upon a time there was a settlement between the SEC and Citigroup over some bad stuff that Citi did, or maybe did, since the settlement did not require Citi to admit any guilt. But then the judge overseeing the case, Jed Rakoff of the Southern District of New York, bravely stood up and said: No, this settlement is Not Right, in small part because of that not-admitting-guilt thing.1 And lo he was a hero throughout the land, except in the Court of Appeals for the Second Circuit, which will likely reverse him.

I’m sure Judge Rakoff’s colleague Victor Marrero didn’t hold up SAC Capital’s proposed settlement with the SEC last week with the express goal of getting financial bloggers to say on Twitter that “Victor Marrero is the new Jed Rakoff,” but … kind of, right?

Here you can read the New Yorker‘s John Cassidy getting all exercised about the settlement, saying that “To his credit, Judge Marrero has, at least for now, refused to go along with this travesty.” I guess a lot of people don’t like this not admitting or denying thing that’s all the rage in SEC settlements these days (and, to be fair, always). But there’s an important difference between the two cases; Judge Rakoff had a reason for rejecting the Citi settlement, and Judge Marrero doesn’t particularly seem to have a reason for rejecting the SAC one.2 Read more »

  • 28 Nov 2012 at 4:48 PM

Everybody’s Jumping On The Insider Trading Bandwagon

It’s a tribute to Steve Cohen’s prescience/power/something that, on what is otherwise not a great day for SAC on the insider trading front, the rest of the news in the world is all pretty much “everybody is insider trading everything all of the time,” so, like, leave Steve alone! Today brings some old-fashioned mustache-twirling insider trading – here you can find the SEC’s charges against Delta Petroleum’s CEO, who apparently tipped his friends about an upcoming buyout and other news; those friends then sent each other emails saying things like “our mutual friend who will go unnamed WINK WINK WINK tells me that DPTR has good news coming MASSIVE NECK-STRAINING WINK” – but the real action is in these two Journal articles on what you might characterize as pervasive insider-trading-lite.

Who insider trades? Insiders, for one. This article about how executives have suspiciously good luck trading for their own account is perhaps too suspicious, as a lot of it is anecdotal or cherry-picked and it conflates 10b5-1 and discretionary trading a bit. Rule 10b5-1 plans, in which executives who do not have material nonpublic information set up automatic future sales (mostly) to top-tick the stock and/or pay for their kids’ college tuition, may have good or bad or indifferent results but you mostly can’t get mad at the executives if their 10b5-1 robots have suspiciously good timing; the robots really are mostly robots. On the other hand they’re not entirely robots and might be ripe for reforming; I’m like 75% on board with Ronald Barusch’s suggestions (I am not as troubled as he is by secret adoption of 10b5-1 plans during clean windows) but the bigger conceptual hole is that, as the Journal notes: Read more »

Every publication today ran a story about how SAC investors are harrumphing around about pulling all their money out of SAC since the words “SAC” and “insider trading” seem to keep showing up in the same sentence and that sentence is sort of miscellaneously bad. Here is my favorite harrumph:

“Patience will be wearing thin among some investors after this latest accusation,” said Vidak Radonjic, managing partner at Beryl Consulting Group LLC in Jersey City, New Jersey, which advises clients on investing in hedge funds. “There is a pattern of potential compliance breaches and the money involved is getting bigger.”

I say unto you, the operative phrase there is “the money involved is getting bigger.”1 And I ask also unto you: if you were a passive investor in a hedge fund, and you found out and/or strongly suspected that your hedge fund was insider trading successfully, what would you do? I know what I’d do! You probably know what I’d do too.

Here is a hypothesis that may or may not be consistent with the facts: Read more »

  • 26 May 2010 at 2:39 PM

Eddie Lampert Takes 15 Percent Beating This Month

Last week, we told you about certain Tiger Cubs that were having a rough go of it this month. Today, we get some updated numbers thanks to Hedge Fund Alert. Eddie Lampert’s ESL Investments is getting walloped, off 15 percent so far this month.

As one investor put it: “A lot of guys are long and wrong in this environment.”

Here’s some other results. Read more »

  • 04 Dec 2009 at 2:35 PM

‘Why Would We Even Consider A Woman?’

irish.jpgThem, too.They may not be as “cute” or “sexy” as Andy T. in a schoolgirl outfit but the three-year-old letter from Tong’s lawyer to SAC Capital has couple of other fun tidbits.
First, of course, there’s the market-manipulation stuff. Reuters has that covered (click and scroll down), so we’ll move on to the character assassination.
Buried in a footnote–attached to the bit about Ping pinching Andy’s ass–on page 4 are a series of gems allegedly from the mouth of Mr. Jiang depicting him as a racist, anti-semite and sexist. How Jiang’s racism, anti-semitism and sexism is relevant to Tong’s claims that sexual assault is not OK in the workplace are unclear, but here they are, for your reading pleasure.

Read more »

  • 17 Nov 2009 at 8:22 AM

Steve Cohen Spits In Ken Lewis’s Face

cards_Khearts.jpgWill the indignities heaped upon Bank of America never end?
It can’t find anybody who is willing to step into the considerable–if dirty–shoes of the inimitable Ken Lewis. Its former CFO just got canned for helping to run GMAC Financial Services into the ground. And now, hedge funds are running as fast as they can from the pride of the Queen City.
Word of Renaissance Technologies’ defection hurts, but it can be rationalized. What do computers know anyway? And did you know that the place is run (for another few weeks) by an old drunk who reeks of stale tobacco?

Read more »