13 Accused of Trading as Insiders

[Breeze54]

13 Accused of Trading as Insiders

http://www.nytimes.com/2007/03/02/business/02insider.html?_r=1&oref=slogin

By JENNY ANDERSON and MICHAEL J. de la MERCED
Published: March 2, 2007

It started in 2001 with two old friends meeting at the Oyster Bar in the basement of Grand Central Terminal in Manhattan, discussing a $25,000 debt.

It ended yesterday with federal authorities saying that they had exposed one of the most far-reaching insider trading schemes on Wall Street in decades, involving four investment banks and a web of hedge funds, day traders, lawyers and even a few supervisors, who upon discovering evidence of insider trading, blackmailed the traders to keep quiet about it.

Thirteen people were accused yesterday of taking part in the trading ring, including a former Morgan Stanley compliance official, a senior UBS research executive, three employees from Bear Stearns and a Bank of America employee.

Linda C. Thomsen, chief of enforcement at the Securities and Exchange Commission, described the scheme as one of the most “pervasive Wall Street insider trading rings since the days of Ivan Boesky and Dennis Levine.”

Nine of the defendants have been arrested, and four have pleaded guilty to charges ranging from securities fraud, conspiracy to commit securities fraud and bribery. The investigation, conducted by the S.E.C., the Federal Bureau of Investigation, and the office of the United States attorney in Manhattan, has been under way for more than a year and is continuing.

The schemes described by federal authorities were unusual for their breadth and the seniority of the executives involved.

The tactics, however, were all too familiar: Wall Street executives tipping hedge fund traders about potential upgrades or downgrades of stocks, information sure to move a stock’s price; leaking information about pending mergers and acquisitions, and taking kickbacks to get access to hot deals. In the middle, authorities say, was a hedge fund manager looking for an edge.

More at Link...

[Breeze54]

1. Damn!!!

It's a really convoluted web they wove!!

What a bunch of !

snippets--->

Mr. Guttenberg provided hundreds of tips to Mr. Franklin about rating changes so
that he could make quick trades in his hedge fund at Bear Stearns, Lyford Cay Capital.
The two agreed to share the after-tax profits after the debt between them was settled.
They exchanged cash at arranged meeting places — echoes of the Boesky case — and bought
disposable cellphones and created codes to communicate with one another.

Mr. Guttenberg pleaded not guilty yesterday. His lawyer declined to comment.
Mr. Franklin has pleaded guilty. His lawyer declined to comment.

Over five years, according to the S.E.C., Mr. Franklin made $5 million in illicit profits
for his various hedge funds, his own personal accounts and an account in the name of his
father-in-law, said the S.E.C.

But the ties went further than the two friends: each had his own network of tippees.

The case was so complex that the United States attorney in Manhattan, Michael J. Garcia,
yesterday used a large poster board to explain the inner workings.

“Clearly greed is at work,” he said.


Ya think???

Mr. Babcock has pleaded guilty. His lawyer declined to comment.
Mr. Tavdy pleaded not guilty. His lawyer did not return calls.
Mr. Risoli pleaded not guilty. His lawyer could not be reached yesterday.
ALL their lawyers declined to comment!! Gheesh! I wonder why??

:wtf:
For two counts of conspiracy to commit fraud and four counts of securities fraud,
Mr. Franklin would face a maximum of 90 years in prison, but sentencing guidelines
suggest he would more likely face about five years.

Five years?? Five fucking years as opposed to NINETY????

:wtf:

:banghead: :argh:

[notadmblnd]

9. And how many years does the avrage street thug get for robbing a party store again?

If you're going to be a thief, by all means I guess it's better to go big.

[Lasher]

2. Thieves

Well, as through this world I've rambled
I've seen lots of funny men.
Some will rob you with a six-gun
And some with a fountain pen.

http://homepage.mac.com/danielmartin/Dylan/html/songs/P/PrettyBoyFloyd.html

[Breeze54]

3. Cute little ditty!

;)

You said it but this is not just stealing! This is conspiracy! And a large network!

What happened to the RICO Act?? :shrug: Why doesn't that apply here?

[Sherman A1]

5. Agreed

Excelllent point about RICO

[SoCalDem]

4. And how many 401-ks suffered because of these scammers..?

The stock market is just a gilded, invisible slot machine..

This is nothing new.. I am just surprised that people are surprised when these schemes get found out :)

[Lasher]

7. Doesn't surprise me.

There's legal ways to steal money in the stock market. Then there's always a bunch of knuckleheads like these who are so greedy they get reckless.

They were skimming profits right off the top, which diminished value of equities held by those who were playing by the rules.

The same thing happens when senior executives grant themselves boatloads of stock options and set the value at the lowest point in the year. Or when they restate options they are holding to change the grant price to a lower value. This is one way they walk away with hundreds of millions of dollars no matter what their performance is - and all perfectly legal.

The SEC has been looking into schemes like this. Buy the executives typically agree not to do it again and just come up with another scheme to enrich themselves at the expense of everyone else. They can do this because the Boards Of Directors do not primarily represent the interests of shareholders as they are supposed to do. The BODs are in on it with the executives.

[aint_no_life_nowhere]

6. I'm sure this was all over cable news today, right.

right up there in the headlines along with CNN's reporting about how well the stock market was doing and how investor confidence had returned, with the DOW only down by 34 points today.

[Breeze54]

10. It was reported on the over night national news

but I haven't heard a peep about it on my local news. I don't get cable.

[salin]

8. k & r