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How To React When The FBI Asks You To Help It Take Down SAC Capital Et Al

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So! As previously mentioned, federal authorities are wrapping up a little project they've been working on for the past three years involving alleged insider trading, hedge funds, that sort of thing. The government claims the probes could "eclipse the impact on the financial industry of any previous such investigation" and that charges may come before the end of this year and perhaps as early as this week. Naturally it's unclear as to exactly who the Feds are hoping to name as participating in the passing or receiving of material, non-public information but some educated guesses can be made, based on the accosting of one analyst, Jonathan Kinnucan.

Kinnucan, the founder of boutique firm Broadband Research LLC, was "sipping wine on his front porch in Portland, Oregon" when two men in suits popped out of a gray sedan and quite aggressively accused him of sharing inside information with his clients (hedge and mutual funds, mostly). They threatened to arrest him but then, changing to a friendly tone, suggested that things could be made better for Kinnucan if he did them a favor. "We think you can help us,'" he recalls. "There is this guy in particular we are after," he remembers them saying. "We want you to have a conversation with him and record it."

That guy, according to the Journal, is someone at SAC Capital, and while it's not certain the proposed recorded phone call would be between Kinnucan and the King of the Jungle, it is quite certain the Feds want the most majestic hedge fund in all of Stamford, CT and possibly Fairfield county.

But back to Jonathan. Several years back he was hit by a bus while on a run in Florida. His lungs were collapsed, his liver lacerated and there was serious internal bleeding and while speaking with the gentlemen from the FBI, he says "I just thought about being under that bus and knowing you have to keep fighting." Despite inviting them into his kitchen, the hits kept coming. "It felt like a street mugging," he says. "They were hammering me from either side."

Kinnucan was told if he didn't cooperate "there would be trouble," and given the terrifying situation some might have buckled under the pressure. Did JK? Did he break down and cry, telling the Feds "Okay, fine, I'll do it, I'll do anything, just don't hurt me?" No, he did not.

Instead, he 1) informed the agents that what he does "has nothing to do with 'inside information' and everything to do with a lot of hard work and insight" and that "if he's trafficking in inside information...then so is the rest of Wall Street."

2) Told them to piss off and thanks but no thanks to their offer to wiretap (at least we think; it's actually unclear if JK has been wiretapped, but we're giving him the benefit of the doubt).

3) Sent out a whimsical email to clients, including SAC and Citadel, tipping them off to the investigation, describing the visit and his heroic efforts to shield them from these beasts.

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

When the time comes, hopefully all of you will take a page from Kinnucan's playbook. You lie down in the street (and get hit by a car or bus) if you have to.

FBI Visits Shed Lights On Tactics In Insider Trading Probes