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insider trading
 

SAC Against the Ropes

Edmundo Braverman's picture
ST
(Human, 14,409
 
Points)
 on 5/21/13 at 7:30am
steven-cohen-sac-capital.jpg

It's been a rough couple of weeks for Stevie Cohen and his crew, and the situation is growing more "fluid" with each passing day. I kinda kept one eye on it all weekend after the somewhat cryptic announcement on Friday that SAC would no longer be "fully" cooperating with the government's investigation into insider trading at the fund.

Then came the announcement that Cohen himself had been subpoenaed, and the previous announcement was interpreted to mean that he planned to take the Fifth rather than testify before a grand jury.

Now the rumor is that Cohen may be cutting a deal with the feds that would close the fund to outside investors altogether. This deal would include an admission of guilt on the part of SAC in exchange for deferred prosecution (meaning no criminal liability unless the firm were to break the law again).

JCP: Yet more proof of insider trading

DontMakeMeShortYou's picture
HF
(King Kong, 1,964
 
Points)
 on 3/4/13 at 4:21pm

JCP announced a 10mm secondary offering (~5% dilutive) after-market, yet the stock traded down 6.4% intra-day, starting up ~1% and steadily declining to -5.4%.

http://i.imgur.com/OQPlhPh.png

After HNZ options trading, this is further evidence that insider trading remains rampant despite the SEC's attempt to crack down on the practice.

Trader and Pals Charged for Insider Trading

Eris's picture
EN
(Chimp, 5
 
Points)
 on 12/28/12 at 5:04am

Nomura trader Trent Martin was arrested last week resulting from US charges of security fraud concerning IBM’s $1.2b 09’ acquisition of software firm SPSS.

Apparently, after learning of the acquisition from a close friend working as a lawyer on the deal, Martin purchased common stock, yet not before telling his roommate (Mr Conradt). Now a total of five participants have been charged, allegedly profiting up to $1.2million on both common stock and calls after SPSS popped 41% on the day of announcement.

What follows are segments of a rather humorous exchange between Martin’s roommate, Conradt, and another associate:

Conradt: we gotta keep this in the family
Weishaus: dude, no way, i don't want to go to jail, f--- that

SAC Capital Gave out a Bribe

ReadLine's picture
O
 
Points)
 on 12/11/12 at 1:04pm

Has anyone heard a rumor concerning SAC capital and a bribe made to a former trader specializing in energy/utility stocks? I've heard from two seperate sources that Steve Cohen has OK'd a bribe "appreciation bonus" to a FORMER employee somewhere in the seven figures "millions of dollars". Persumably to guard against publicity of illegal activities "trade secrets".
How it came about (blackmail?) I don't know. Though the only thing guarding against it is fear of related criminal charges against the blackmailer. On the other hand whistleblower awards from the SEC is still a possibility.
Seems that once appreciation bonuses have to be paid, SAC is on its last legs legally speaking.

What technically constitutes insider trading?

prudentinvestor's picture
(Orangutan, 317
 
Points)
 on 12/5/12 at 7:29pm

I'm fully aware when an Investment banker or someone in a similar position such as a PE analyst, tells another professional about a m&a deal beforehand and the individuals profit of the information, it constitutes inside trading.

But what if two people are married. One works in IB and the other does something completley non-finance related such as working as a programmer. If the indvidual told his/her spouse about an upcoming acquisition and the spouse purchased shares of the target, knowing the share values will increase is it still insider trading? Technically, the whole family is better off but the couple could have seperate brokeage/savings accounts. Is it possible for the SEC to find out about this, I assume no.

Where is the line drawn?

Why We Should Legalize Insider Trading

GMngmt's picture
O
 
Points)
 on 12/2/12 at 6:37am
A Shadowy Dealing

James McDermott. Jeffrey Skilling. Martha Stewart. Raj Rajaratnam. Samuel Waksal. They’ve all been indicted for the financial taboo of trading on private information profitably. Recently, Steven Cohen’s $14B HF SAC Capital Advisors is the latest whipping boy and highest profile member to potentially be added to CNBC’s exclusive list of Famous Insider Trading Cases. However, financial history reveals that before the 1960’s such practices were the norm. Fast forward to 2012 and the reality of its enforcement according to Henry G. Manne, Dean Emeritus at George Mason University is that it’s, "…arbitrary, capricious, political and extremely inefficient." Read on to see where I take bIatoise’s post, Why Is Insider Trading Illegal?

Insider trading?

carlfox's picture
ST
(Orangutan, 256
 
Points)
 on 11/29/12 at 9:10pm

Deleted.

Martoma won't turn, so SAC in the clear?

grosse's picture
HF
(Orangutan, 319
 
Points)
 on 11/23/12 at 11:36am

If Raj got 11 years for making $90m, what is Martoma facing? You'd think he'd tell the Feds whatever they want to hear, true or not, given the sentence he's facing.

Plus he's got no allegiance to Stevie, right? They paid him big, but then he got fired a few years ago.

The timing makes it appear as though the Feds had this strong case against Martoma for some time. They've been trying to get him to turn on Stevie, but now they've come to the conclusion that it's not going to happen, so they'll charge Martoma and throw him away.

Thoughts? Start a "how many years will Martoma get" pool?

I'll go with 18.

Legalizing Insider Trading?

turtlefarmer's picture
(Chimp, 5
 
Points)
 on 10/25/12 at 4:54am
Bud Fox.jpg

I was reading an article on the recent sentencing of former Goldman director Rajat Gupta for insider trading and it reminded me of a quote by Milton Friedman: "You want more insider trading, not less. You want to give the people most likely to have knowledge about deficiencies of the company an incentive to make the public aware of that."

Can anyone elaborate on Friedman's contention? Or for those who disagree with him, do you feel Gupta is getting off easy on just a 2 year sentence?

Ex-SAC Capital Manager Claims the Fund Trades on Inside Information

TheKing's picture
O
 
Points)
 on 10/2/12 at 3:30pm
Steven A. Cohen (Costanza?)

According to a Bloomberg News report, a former portfolio manager at SAC Capital told the FBI that it was understood that inside information was used in crafting trade ideas for Steven A. Cohen, SAC's founder and manager.

The portfolio manager in question is Noah Freeman, In February 2011, he pleaded guilty to securities fraud after speaking to FBI agents and Federal prosecutors in New York in a proffer session. Per Bloomberg:

At SAC Capital you were expected to provide your trading ideas to Cohen,” Freeman said, according to a Dec. 16, 2010, memo written by FBI Special Agent B.J. Kang. “Freeman and others at SAC Capital understood that providing Cohen with your best trading ideas involved providing Cohen with inside information.

The Other Side of Insider Trading

chabo11's picture
(Orangutan, 310
 
Points)
 on 5/25/12 at 8:30pm
wiretapping.jpg

Countless articles have been written over the years weighing the so-called ‘benefit’ of insider trading—more efficient markets—with its obvious evils. Yet over the past few years, a new debate has emerged over where to draw the line between aggressive information gathering and personal privacy.

Beginning with Raj Rajaratnam in 2009, the government has increasingly favored wiretaps to convict dozens of insiders. Wiretaps have been very effective—it’s hard to argue your innocence when your voice directly incriminates you—but they’ve also been very controversial.

In one case, the government continued listening to highly personal conversations between a man and his wife. In another, an ordinary civilian was the accidental target of a phone tap for nearly a year.

Do you consider the use of wiretaps to catch insider trading a public service or an invasion of privacy? Where do you draw the line? Are such methods the best way to deter future insider trading violations?

The Congressional Insider Trading Fiasco

hdavid57's picture
O
 
Points)
 on 4/6/12 at 7:59am

Wasn't it wonderful the other day to see Democrats and Republicans working together, side by side, for a common goal--to end insider trading in Congress? How about that? They CAN agree on something after all. President Obama mentioned his eagerness to sign the STOCK Act (STOCK is an acronym for Stop Trading on Congressional Knowledge) during his State of the Union message in January.

Is Bob Stiller in Jail Yet?

Edmundo Braverman's picture
ST
(Human, 14,409
 
Points)
 on 3/28/12 at 8:00am

Martha Stewart must be having a conniption fit right about now. She did five months in the federal pen and another five under house arrest for selling less than 4,000 shares of ImClone on an insider tip that wasn't even hers.

It has been revealed that Green Mountain Coffee Roasters (GMCR) founder Robert Stiller was informed by Starbucks that they were about to enter the single serving coffee market a couple weeks before it was formally announced. Now it looks like Stiller then promptly dumped a million shares of GMCR before the announcement was made public:

Last Week’s Notable Insider Purchases

Insider Monkey's picture
(Baboon, 170
 
Points)
 on 3/17/12 at 5:04am
pf.jpg

Insider transactions are usually worth looking at. Though insider purchases or sells do not always send clear “buy” or “sell” signals, it is always a good starting point to choose which stocks to be analyzed. In this article, we are going to take a closer look at a few insider purchases reported to SEC during the last week. We selected a few notable insider purchases with large dollar amounts purchased and large number of shares purchased. We also focused on stocks with relatively large market caps (above $1.5 billion) because these have enough liquidity to absorb sudden surges in demand.

Insider Trading - Monster Case to Double Prosecutions Since 2009

BCbanker's picture
IB
(Gorilla, 633
 
Points)
 on 2/28/12 at 11:47am
gordon gekko

Happy to see Gordon Gekko on the front page of the Journal today. He is now part of a PSA put on by the FBI to discourage insider trading. The 120 person case that is being compiled and could be expanded to 240, is by far the largest in history.

The most astonishing part to me, ONLY 66 PEOPLE HAVE BEEN CHARGED WITH INSIDER TRADING SINCE 2009??!?! They really must only go elephant hunting. I am no lawyer but you must just have to build an iron clad case to get people convicted on this stuff. Only 57 of the 66 were convicted or plead guilty.

Someone help me out here. Am I reading this too literally or are there really such a limited number of cases.

Transcript of David Einhorn’s Phone Call with Punch CEO: Insider Trading

Insider Monkey's picture
(Baboon, 170
 
Points)
 on 2/17/12 at 3:40am
Einhorn.jpg

David Einhorn’s insider trading case provides an opportunity to get to know him better. You don’t get to eavesdrop on a conversation between a top hedge fund manager and a CEO of a company (two bankers were also eavesdropping while David Einhorn was talking to Andrew Osborne). Here is the transcript of David Einhorn’s phone call with Punch CEO:

Eddie, I know you will love this

mongoose's picture
O
(King Kong, 1,030
 
Points)
 on 11/14/11 at 11:58am

http://www.businessinsider.com/spencer-bachus-cong...

Forget Pelosi, Here's The Most Stunning Detail From The Congressional Insider Trading Report

Read more: http://www.businessinsider.com/spencer-bachus-cong...

(vid) Congress & Insider Trading!??!

Hamilton's picture
 
Points)
 on 11/14/11 at 9:48am

Is such a thing even possible? I thought that it seem logical that people in Congress, like people in banking, were severely restricted in what they can trade? I guess not.

http://www.cbsnews.com/video/watch/?id=7388130n

What Is Insider Trading?

Insider trading is a financial crime which involves trading based on information which is not available to the general public. Insider trading is only illegal when the information being used is not available to the public, for example if a press statement has been made regarding the issue then anyone within the company is free to act on that information.

Giving advice or tips to a 3rd party in order for them to act on your behalf is also insider trading, and makes the 3rd party liable to the crime as well.

Related Terms

Insider trading as a credibility measure for marketing activities

claas's picture
ST
(Baboon, 108
 
Points)
 on 9/30/11 at 8:28am

I am investigating whether “management (insider) trades add credibility to marketing activities (in this case product introductions)”, thereby I am focusing on S&P 1500 companies with a time span from 1998 to 2009.

I already have a data set with management trades for this time span, now I need the product introduction data.

I am looking for data related to product introductions: Product introduction date, Company (S&P1500), Time (1998 – 2009), Ticker symbol.

Any suggestions (data bases, web sites, research, etc)

Thanks - highly appreciated.

S&P Has Some Splaining To Do

Edmundo Braverman's picture
ST
(Human, 14,409
 
Points)
 on 8/16/11 at 6:07am
lucy-and-ricky21.jpg

We all had to see this coming. The SEC has opened an insider trading investigation into Standard and Poors regarding the recent downgrade of the U.S. credit rating. On the Friday before the downgrade was announced, trading volume spiked and the Internet was rife with rumors of an impending downgrade, even here on WSO.

The SEC has asked for a list of S&P employees who were privy to the downgrade prior to the announcement. It was early in the day on that Friday when the rumors started flying around Twitter. A couple hours later it was being said that the rumors originated with BNP Paribas, of all places. If that proves to be true, and there was in fact a leak, that could have the makings of an international conspiracy.

Intralinks (IL) Falls 7.5%+ on No News, Possible Insider Trading Alert!

BankingRUs9's picture
IB
 
Points)
 on 6/7/11 at 1:51pm
Intralinks.jpg

After trading flat for days, Intralinks just lost over 7.5% on no news. For those of you who don't know, "IntraLinks, formerly TA Indigo Holding Corporation, is a global provider of software-as-a-service (SaaS) solutions for securely managing content, exchanging critical business information and collaborating within and among organizations." The company serves financial institutions host data rooms, etc. Now the company performed well in 2010, missed guidance slightly this spring, and traded down 30%. Over the past two weeks, it performed well enough to stay in a band around $20.00/share.

Want to participate in an IPO but the CEO is family friend. Ethical considerations?

Longcat1982's picture
ST
(Monkey, 39
 
Points)
 on 6/6/11 at 11:54pm

I've been working as a Portfolio Analyst for a hedge fund since graduating with my MFE a while ago. I'm thinking of submitting a recommendation for a company IPO to the fund, but I'm a little reluctant to proceed since I heard of the company from family, who is also friends (not relatives) with the CEO. I won't disclose details but this is a cutting edge tech startup in a sub-sector I'm following closely.

I'm not pressured in any way to support the IPO and I still fully intend to evaluate the company on its own merits before submitting a recommendation. I currently have no clue about any non-public information on the company either.

Would there be any ethical considerations in this case?

Insider trading academic articles

WSOaccount's picture
(Chimp, 2
 
Points)
 on 5/17/11 at 7:15am

Hello all,

I am going to be doing research for a grad school paper and I wanted to see if insider trading may affect any of my conclusions. To that end I was wondering if anyone knew of any good journal articles on the subject? There are several papers I have encountered but as I am a little out of my depth I wanted to make sure they are the significant ones.

My focus is on stock valuation and contrarian investment strategies ie (Lakonishok, Shleifer and Vishny 1994) and (Fama and French 1992) and I wanted to see if insider trading had any effect on mean reversion.
Thank you for your help.

Rajaratnam Guilty

sayandarula's picture
O
(King Kong, 1,809
 
Points)
 on 5/11/11 at 10:14pm
Rajaratnam Guilty

http://news.yahoo.com/s/nm/20110511/ts_nm/us_galle...

"It will likely set the stage for a dramatic change not only in the way that the Wall Street insider-trader activities are investigated and prosecuted, but most likely this will have a chilling effect on individuals and companies that trade."

Is the Market Rigged?

Edmundo Braverman's picture
ST
(Human, 14,409
 
Points)
 on 5/12/11 at 6:00am

In light of Raj's conviction yesterday, here is an interesting interview with Barry Ritholtz of Fusion IQ about how prevalent insider trading is and whether or not the average investor can get a fair shake in today's market. Ritholtz believes true insider information is far less common than we're led to believe, but that doesn't mean the average Joe can make money in the market, either. He compares the market to a casino, with the odds stacked ridiculously against investors. But he also shares some of the valuation techniques of hedge fund manager like himself which help them think outside the box. Good stuff:

Insider Trading...on the Comeback

Midas Mulligan Magoo's picture
 
Points)
 on 4/23/11 at 12:10pm
raj

With Raj Rajaratnam's lawyers concluding their defense statements earlier this week the Galleon saga will soon be over. Rajaratnam stands accused of pocketing over $50 million in illicit profits and faces up to a quarter century of jail time if convicted.

Raj's defense team has stood solid behind the theory that he only used publicly available information in his trades, while the Feds are beating the insider trading drum with consistent pressure. For me, this case has been less about actual guilt or innocence and more about the laissez faire attitude towards the issue exhibited by the industry itself.

Is Sokol's Lubrizol share purchases insider trading?

fomc's picture
(Baboon, 131
 
Points)
 on 4/1/11 at 8:23am

what do you think? insider trading, unlawful..?

Why chemists should stay in the lab

SchmidtN23's picture
IB
 
Points)
 on 3/30/11 at 12:15am
Cheng Yi Liang

http://online.wsj.com/article/SB100014240527487044...

Obviously this story is just sad to hear and unfortunate for the FDA. Cheng Yi Liang and his son are accused of trading on material non-public information in over 27 FDA announcements.
And they made as much as $3.6 million from these trades.

I just cant understand how he kept trading over and over and only made over $3-4 million??? I mean seriously, if youre going to cross the line that many times may as well throw some margin around and make yourself wealthy, right?