Earlier today, Bill Hwang, the founder of the Tiger Cub's Asia-based branch, Tiger Asia, pleaded guilty to one count of wire fraud and agreed to fork over $44 million to make allegations by the SEC of insider trading in Chinese bank stocks go away. According to Hwang, his firm "regrets the actions for which is accepts responsibility today and is grateful that this matter is now resolved." According to SEC director of enforcement Robert Khuzami, who we would love to consider a side job writing fables for children* about foxes who trade on unreleased information about clinical trials of Alzheimer's drugs and take advantage of innocent hens, Hwang was a very bad boy and should serve as a cautionary tale for anyone thinking about breaking the law.

"We have been remarkably successful in convincing persons to cooperate with the government, and provide evidence to us, and in court of law," SEC director of enforcement Robert Khuzami said during a press conference the day the government went public with its charges of insider trading against former SAC Capital employee Mathew Martoma. To the untrained ear, Khuzami probably appeared to be speaking to no one in particular, just sending a general message to any would-be criminals out there that once the government got to their co-conspirators, it'd be all over. No one wants to do time, and everybody flips. To those who've been following Operations Perfect Hedge, though, and have watched the Feds' relentless pursuit of Steven A. Cohen,  it was obvious they were sending a clear message to the Big Guy: "We got ya boy, and ya goin' down." And since its track record of getting people to turn on their colleagues and in some cases, their best friends (see: Noah Freeman/Donald Longueuil, and these guys, and these guys, and this guy) really has been "remarkably successful," and since Martoma has a wife and two young kids and his whole life ahead of him, Khuzami and Co. probably assumed they had this one in the bag. But not so.

Pop quiz: you're an insider trader looking to score some fresh intel. You've exhausted all of your sources and what's more, you're sick of just hitting them up for tips-- you want to make obtaining material non-public information fun again. You figure the best way to go about that is to identify a target with obvious vulnerabilities that can be exploited for profit (always a good time). Do you a) go with the Danielle Chiesi move (i.e. requesting info post or, better yet, mid-coitus) b) get ordained as a Catholic priest and press penitents for potential market moving news during confession or c) go for broke: start attending AA meetings, become someone's sponsor and then, when he/she's confiding in you that the stress of his/her job at a certain company has been driving him/her to down a bottle of vodka every night, move in for the kill? If you're Timothy J. McGee, the answer is simple. The Securities and Exchange Commission today charged two financial advisors and three others in their circle of family and friends with insider trading for more than $1.8 million in illicit profits based on confidential information about a Philadelphia-based insurance holding company’s merger negotiations with a Japanese firm. The SEC alleges that Timothy J. McGee and Michael W. Zirinsky, who are registered representatives at Ameriprise Financial Services, illegally traded in the stock of Philadelphia Consolidated Holding Corp. (PHLY) based on nonpublic information about the company’s impending merger with Tokio Marine Holdings. McGee obtained the inside information from a PHLY senior executive who was confiding in him through their relationship at Alcoholics Anonymous (AA) about pressures he was confronting at work. McGee then purchased PHLY stock in advance of the merger announcement on July 23, 2008, and made a $292,128 profit when the stock price jumped 64 percent that day. “McGee stole information shared with him in the utmost confidence, and as securities industry professionals he and Zirinsky clearly knew better,” said Elaine C. Greenberg, Associate Director of the SEC’s Philadelphia Regional Office. “As this case demonstrates, we will follow each link in a tipping chain all the way to Hong Kong if necessary.” From the complaint: In early July 2008, immediately after an AA meeting, the Insider confined to McGee that he had been drinking as a result of the mounting pressure, and revealed to McGee that the source of the pressure was ongoing confidential negotiations to sell PHLY. The Insider told McGee that the stress generated from his participation in the negotiations was having a negative impact on his personal life. In response, McGee expressed interest in the details of the PHLY sale and questioned the Insider about the details fo the impending deal. SEC Charges Five With Insider Trading on Confidential Merger Negotiations Between Philadelphia Company and Japanese Firm [SEC]

Remember, earlier this summer, when a whole bunch of banks were sued over allegations their employees manipulated Libor? And Bob Diamond, CEO of the first, and so far only, bank to settle with regulators, lost his job, as did a bunch of his colleagues? And it was suggested that Barclays's offenses were but a drop in the bucket compared with those of UBS? And experts projected that this whole thing could cost the banks being investigated (of which there are many) tens of billions of dollars to make go away? And Nellie Diamond stopped Tweeting? As much fun as that's all been, a lot of firms would like to avoid going through it again, and to that end, have asked their compliance teams to run some workshops teaching employees how to keep things on the straight and narrow. For instance, while you might think that people would have mastered email by this point on the evolutionary chart-- specifically, that it never goes away and might be read again-- you would think wrong!  So the point is being hammered home in remedial electronic correspondence classes, particularly to those who'd previously not seen an issue with writing stuff like, "Anything for you, Big Boy" as a response to the request "Can you manipulate Libor for me today when you've a sec?" Also on the schedule-- mock happy hours with the team for members of the staff who can never seem to remember the appropriate response for when you're out at Punch Tavern and someone brings up "Holly with the cans who did me a solid by shaving 45 basis points off our submission." "Everyone is more paranoid, that's for sure," said one department head at a European investment bank, where the trading floor is festooned with posters reminding staff to report any suspicious behaviour. At his bank and at least one other European firm, executives said they were being asked to take part in an increasing number of behavioural coaching sessions, including simulations of pub outings. These were mainly done via webcasts, where participants act out conversations with colleagues where the talk turns to clients or office gossip, two bankers said. "You have to turn around and say, 'No, let's not talk about that'," said one. Culture Clean Up Follows Bankers To Bar [Reuters]