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The Best Insider Trading Case Ever Closes

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We're perilously near the end of what must be our favorite insider trading case. Back in 2004, a group of young bankers got together in a spa near the Fulton Fish Market and concocted a scheme that seemed based on every insider trading case that ever existed. They'd trade on their own M&A deals. They'd steal Business Week. (Really. Business Week.) They'd front the trades through Eastern European grandmothers. Basically, it's your best ideas when you are drunk. And they did it.
Now a federal court has entered final judgments against four of the defendants. The Commission charged 17 people in connection with an international scheme that netted nearly $7 million in illicit gains.

SEC Closes Case on Jail-Bound Insiders [CCH Wall Street]

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Over the past several years, much has been made about the supposed incompetence of the Securities and Exchange Commission. The regulator failed to realize Bernie Madoff had been running an illegitimate Ponzi scheme, despite more or less being told by Bernie Madoff himself, "I am running an illegitimate Ponzi scheme." It went after David Einhorn, when it should have been going after Allied Capital, the company the hedge fund manager told them was committing fraud. Its proposal for stepping up investigators' games was to start a Fraud College.* Until recently, it employed individuals in the office responsible for "ensuring exchanges follow guidelines concerning...computer audits, security, and capacity" who had "little or no experience with exchange technical matters." At this point, there have been so many stories about the SEC getting things wrong that the default is to assume it fucked up, even when that is not actually the case. What's more, even when Team Schapiro is on top of its game, resources are so strained that many scams that should be caught fall through the cracks. So you can maybe understand why a group of "high school buddies," along with a few other guys they picked up along the way, who were engaging in securities fraud, weren't too worried about getting caught.

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