I didn’t follow the trial of former Goldman Sachs Group Inc. director Rajat Gupta. It seemed like a fairly straight-forward case under the current jurisprudence for insider trading. He possessed material, non-public information. He had that information because he sat on the board of directors of Goldman Sachs. Because he was a board member he [...]
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You Scratch My Back, I’ll Scratch Yours
The Securities and Exchange Commission charged Robert W. Kwok, who was Yahoo’s senior director of business management, and Reema D. Shah who was a former mutual fund manager at a subsidiary of Ameriprise, with insider trading on confidential information about a material business combination partnership between Yahoo and Microsoft Corporation. The SEC alleges that Kwok [...]
Insider Trading and Restricted Lists
These are my notes from the “Insider trading and restricted lists” session at the Private Fund Compliance Forum 2012. Two items affect insider trading: federal securities law (10b5) and a firm’s code of ethics under the Investment Advisers Act. The panelists do not circulate a restricted list. The SEC will ask for the restricted list [...]
Smells Like Insider Trading
Apparently Blue Horseshoe loved Zhongpin Inc., a China-based pork processor whose shares trade in the U.S. The SEC jumped on the accounts of six Chinese citizens and a British Virgin Islands entity. (Apparently the Chinese prefer to use British Virgin Islands entities. It’s the second largest investor in China after Hong Kong.) The facts stink [...]
Informants and Insider Trading
The cooperation of a single Wall Street trader has led directly led to the prosecution of 10 individuals. That makes David Slaine one of the most productive informants in the history of US financial crimes. In a sentencing memorandum (.pdf), the US Attorney’s office states that “Slaine’s cooperation has been nothing short of extraordinary” and [...]
When Red Flags Are Not Enough
Purchase out of the money call options set to expire in two weeks, do not have any activity on that stock before, exclusively use options when you have rarely traded options in the account before, purchase those options just before the announcement of the company’s acquisition, and then quickly try to move the money off-shore. [...]
Private Company Shares, Valuation, and Employee Stock Repurchases
There has always been a theoretical discussion that there could be insider trading on private company shares. I have not seen the theory tested in court. However, a recent enforcement case by the SEC gets close to the theory. The case involves a company re-purchasing shares from employees at a discounted price. The SEC makes [...]
The Leaves Say You Will Go Free
The insider trading case against Raj Rajaratnam seemed very tight. The prosecutors had him on tape discussing the inside information from wiretaps. So why did he fight his insider trading charges and get a lesser sentence than the 11 years that was handed down last week? Ola Leaves. Suketu Mehta in the Daily Beast discussed [...]
I Wonder if We Will Laugh at his Phone When He Gets Out?
You could watch the movie Wall Street and many things may still ring true. Of course its the 1980s, so the clothes and the women’s hair stick out. But the icon is the big brick cell phone. It was huge and expensive for its time. And all it did was makes phone calls. It was [...]
More on the Massachusetts Regulations on Expert Networks
The Massachusetts Secretary of State issued a new regulation that would affect the ability of investment advisors to use expert networks. This was a direct result of Risk Reward Capital Management being based in Massachusetts. Since the management company was registered as an investment adviser in Massachusetts they are subject to examination and enforcement by [...]
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