Husbands Of The Year Didn't Realize Wives Were Serious When They Said 'Don't Trade On This Inside Information'

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Ching Hwa Chen and Tyrone Hawk know what we're talking about.

Ching Hwa Chen, 61, of San Jose, California, overheard his wife, Informatica Corp. (INFA)’s senior tax director, discussing the company’s quarterly results in June 2012 and gleaned that they might miss its forecasts, the SEC said in a complaint filed today in federal court in San Jose, California. Chen bought options and sold the company’s shares short, making $138,000 when they dropped after the company didn’t make the forecast, the SEC said. His wife had told him not to trade in Informatic shares under any circumstances and Chen hid the trades from her, the SEC said. Chen, who didn’t admit or deny wrongdoing, agreed to pay $280,523 to settle the case, according to the SEC.

In a separate complaint filed in San Jose, the agency said Tyrone Hawk, 46, of Los Gatos, California, made $151,480 by selling shares of Acme Packet Inc. that he bought after overhearing his wife, an Oracle Corp. (ORCL) finance manager, in discussions regarding the software company’s planned acquisition of Acme in February 2013. Hawk didn’t heed his wife’s warning that there was a blackout in trading Oracle securities because it was in the process of an acquisition. Hawk, who also didn’t admit to or deny the allegations, agreed to pay about $305,614 to resolve the SEC lawsuit, according to court documents.

Two Husbands Accused of Trading on Wives Overheard Talk [Bloomberg]

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Members Of Insider Trading "Club" Were Good At Obtaining Material Non-Public Information, Not So Good At Playing It Cool On Conversations Recorded By The Feds

Later this week, Anthony Chiasson, a Level Global co-founder, and Todd Newman, a former Diamondback portfolio manager, will go to trial in Federal Court for allegedly making $67 million in ill-gotten gains, based on inside information they obtained about Nvidia Corp and Dell Inc. According to U.S. Attorney Preet Bharara, Chiasson and Newman, who've both pleaded not guilty, were able to rack up all their profits by teaming up with a bunch of friends and forming an insider trading club, which is a lot like a book club or fight club in that they took roll, traded canapé duties, and drank Pinot Grigio, but different in that instead of discussing The Art Of Fielding or punching each other in the face, they spent every Monday night from 7 to 9 sharing material non-public information with each other. “This case describes a tight-knit circle of greed on the part of professionals willing to traffic in confidential information,” Bharara said when the charges were announced in January. “It was a circle of friends who essentially formed a criminal club, whose purpose was profit and whose members regularly bartered inside information.” In the beginning, when the club was first formed, there was a spirit of camaraderie, as the club members happily traded tips for everyone's mutual benefit. Unfortunately, things started to break down when some people agreed to cooperate with the government by recording their friends admitting wrongdoing, in exchange for leniency. Former Diamondback analyst Jesse Tortora, for instance, gave fellow club member Danny Kuo a call at the direction of the FBI on December 1, 2010, a conversation that Chiasson and Newman's lawyers are trying to use as evidence that Tortora, who will be testifying against them, lacks credibility, based on the fact that when asked by Kuo if his phone was being tapped, Tortora didn't say "Yup! Helping the Feds build a case against you, actually." “What’s happening, man?” Tortora asked during the call, according to a transcript prosecutors submitted to the court. “Dude, is your phone tapped?” Kuo replied. “Wait, is the phone tapped?” Tortora asked, adding, “Why do you ask that?” Despite losing major points for repeating the question-- you never repeat the question!-- and the extremely unconvincing "Oh, why do you ask" attempt to act natural and not like he was working for the government, Tortora ultimately recovered. After Kuo and Tortora discussed defense strategy to explain their trades were made after legitimate research, Kuo concluded the call with a final warning to Tortora about making future calls from a personal telephone, according to the transcript. “I would seriously invest in some quarters, and start calling from 7-Elevens,” Kuo said. Hedge Fund Founder Faces Jury as FBI Raids Yield Trial [Bloomberg]

Rajat Gupta Defense Team: You Think Our Client Would Pass Inside Information To A Guy Who Didn't Even Have The Decency To Invite Him To His Birthday Party?

What motivates people to share material non-public information with a person they know will use it for profit? For some, it's simply about greed. For others, it's about the thrill. For yet others, it's about pillow talk. For Rajat Gupta, the McKinsey director currently on trial for allegedly passing inside information to Raj Rajaratnam, it's about friendship, according to prosecutors who are trying to make the case that Raj and Rajat were the best of buds and that's what buds do. They they back each other up when they drunkenly hit on the girlfriend of the wrong guy at the bar, they stand up as best men at each others' weddings, they pick up the phone and say "Buy GS" when they know for a fact Warren Buffett is about to do so, too. And although attorneys representing Gupta don't deny the two were thick as thieves, they argue that while perhaps back in the day Rajat would have provided useful information to Raj, there is no way he would have done so after Big R twice violated the bonds of friendship. In the first instance, there was this: Defense attorneys have argued that Messrs. Gupta and Rajaratnam had a falling out in fall 2008 after Mr. Gupta lost his entire $10 million investment in a fund managed by Mr. Rajaratnam and therefore wouldn't have passed along inside information...The precise timing of their relationship's deterioration could be crucial in proving Mr. Gupta's guilt or raising doubts in the minds of jurors about whether he conspired to commit securities fraud...Defense attorneys have said Mr. Gupta was furious at Mr. Rajaratnam in the fall of 2008, when Mr. Gupta's $10 million investment in a fund called Voyager Capital Partners Ltd. evaporated. According to Mr. Kumar's testimony, Mr. Gupta felt Mr. Rajaratnam's negligence had allowed Voyager to collapse. And then this happened:

Before They Were Wearing Wires And Trying To Get Each Other To Make Incriminating Statements Re: Securities Fraud, SAC Capital Employees Were Using Threesomes As A Front For Insider Trading

src="https://dealbreaker.com/uploads/2013/05/saccapitalstamford-260x173.jpg" alt="" title="saccapitalstamford" width="260" height="173" class="alignright size-medium wp-image-102764" />Remember Noah Freeman and Donald Longueuil? Former SAC Capital portfolio managers and best buds, fired from SAC for performance and later confronted by the Feds, who divided and conquered the duo by convincing Freeman to record his conversations with Longueuil, which didn't come of much until Noah got Don to give a step-by-step guide to destroying evidence of wrongdoing? Longueuil is set to be released from prison in December and Freeman, who once ran around San Francisco in his underwear while tripping on 'shrooms and shouting "I said buy, motherfucker" at no in particular, is awaiting sentencing. But before they put all this behind them and move on with their lives (Don is taking a three-week honeymoon in January; Noah has hundreds more cities to traipse through half-naked), how about one last trip down memory lane? This one is courtesy of Vanity Fair from a larger article about D&N's boss, and involves the kind of cover for their illegal activities that'd make Ping Jiang curse the fact that their time at SAC didn't overlap.