Step one: Don't tell anyone you're doing it.
Step two: Profit handsomely.
Step three: Get caught by the SEC.
The SEC alleged Shadron L. Stastney, a partner at Vicis Capital LLC, traded as a principal when he authorized the client hedge fund--Vicis Capital Master Fund--to purchase the securities that he had required his friend to divest himself of when he joined the firm because they overlapped with the firm's investments.
However, the SEC alleged he failed to tell the client hedge fund or other partners and management that he had a financial stake in some of the same securities sold to the fund. The SEC further alleged Mr. Stastney personally benefited and received more than $2 million in proceeds from the sale.