Cracked: One of the Biggest Wall Street Insider-Trading Rings
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http://dealbook.blogs.nytimes.com/2007/03/02/13-accused-in-massive-web-of-insider-trading/
Insider-Trading Charges Reach Far Into Wall Street
March 2, 2007, 8:11 am
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 on Thursday with federal authorities saying that they had exposed one of the most far-reaching insider trading schemes on Wall Street in decades, drawing comparisons to the scandals of the 1980âs and 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 âpervasive Wall Street insider trading rings since the days of Ivan Boesky and Dennis Levine.â
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 stockâs 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.
Insider-Trading Charges Reach Far Into Wall Street
March 2, 2007, 8:11 am
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 on Thursday with federal authorities saying that they had exposed one of the most far-reaching insider trading schemes on Wall Street in decades, drawing comparisons to the scandals of the 1980âs and 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 âpervasive Wall Street insider trading rings since the days of Ivan Boesky and Dennis Levine.â
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 stockâs 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.
I'm strictly a smalltime retail system trader, but this bugs me. Apparently a whole shit-load of people went along on this ride.
These people were brokers where the crooks traded. I guess these trades were in the 10,000-30,000 share range and, stupidly, went off the day before the rating changes/merger news officially hit.
Talk about raising suspicion. But what bugs me is that the brokers noticed these profitable trades and mirrored them.
What's to stop ANY broker from copying a successful trader?
Several other people allegedly learned of the illicit trading as the scheme progressed and tried to profit themselves.
Robert Babcock, a Bear Stearns broker who processed Franklin's trades, began monitoring and secretly mimicking many of those transactions, the SEC said. Two other Bear Stearns brokers did the same.
"The actions described in the complaint are clear violations of our policies and procedures," Bear Stearns spokesman Russell Sherman said Thursday. "We have and will continue to cooperate fully with the investigation."
When Guttenberg passed tips to another friend, David Tavdy, his trades were secretly mirrored by David Glass, who owned the day-trading firm where Tavdy did business, the SEC said. Glass and Tavdy later teamed up in their trading.
These people were brokers where the crooks traded. I guess these trades were in the 10,000-30,000 share range and, stupidly, went off the day before the rating changes/merger news officially hit.
Talk about raising suspicion. But what bugs me is that the brokers noticed these profitable trades and mirrored them.
What's to stop ANY broker from copying a successful trader?
Several other people allegedly learned of the illicit trading as the scheme progressed and tried to profit themselves.
Robert Babcock, a Bear Stearns broker who processed Franklin's trades, began monitoring and secretly mimicking many of those transactions, the SEC said. Two other Bear Stearns brokers did the same.
"The actions described in the complaint are clear violations of our policies and procedures," Bear Stearns spokesman Russell Sherman said Thursday. "We have and will continue to cooperate fully with the investigation."
When Guttenberg passed tips to another friend, David Tavdy, his trades were secretly mirrored by David Glass, who owned the day-trading firm where Tavdy did business, the SEC said. Glass and Tavdy later teamed up in their trading.
Quote from Wayne Gibbous:
I'm strictly a smalltime retail system trader, but this bugs me. Apparently a whole shit-load of people went along on this ride.
These people were brokers where the crooks traded. I guess these trades were in the 10,000-30,000 share range and, stupidly, went off the day before the rating changes/merger news officially hit.
Talk about raising suspician. But what bugs me is that the brokers noticed these profitable trades and mirrored them.
What's to stop ANY broker from copying a successful trader?
Several other people allegedly learned of the illicit trading as the scheme progressed and tried to profit themselves.
Robert Babcock, a Bear Stearns broker who processed Franklin's trades, began monitoring and secretly mimicking many of those transactions, the SEC said. Two other Bear Stearns brokers did the same.
"The actions described in the complaint are clear violations of our policies and procedures," Bear Stearns spokesman Russell Sherman said Thursday. "We have and will continue to cooperate fully with the investigation."
When Guttenberg passed tips to another friend, David Tavdy, his trades were secretly mirrored by David Glass, who owned the day-trading firm where Tavdy did business, the SEC said. Glass and Tavdy later teamed up in their trading.
Wayne, the whole system is rotten to the core. You and I both know it.
We are seeing the tip of the tip of the tip of the tip of the iceberg.
More like the snowflake sitting on top of the tip of the iceberg 
press release from the US Attorney's office. This scheme was going on since when? 2001?
http://www.usdoj.gov/usao/nys/pressreleases/March07/ubsinsidertradingpr.pdf
OK, we know this is "big" by little guy standards, but how do we know that this is "One of the Biggest' ? It is easy for the little guy to be cynical and say perhaps this is one of the smaller schemes out there.
http://www.usdoj.gov/usao/nys/pressreleases/March07/ubsinsidertradingpr.pdf
OK, we know this is "big" by little guy standards, but how do we know that this is "One of the Biggest' ? It is easy for the little guy to be cynical and say perhaps this is one of the smaller schemes out there.
They should have used a "Baked Lays" bag. Less greasy!
Sounds like they nailed Franklin and he ratted everybody else to cut a deal. Hope it is a solid case and they all do time. This is an insult to those of us who battle it out using PUBLIC info.
From WSJ:
http://online.wsj.com/article/SB117275753436823375.html?mod=mkts_main_todays_mkts_tac
A 'Brazen' Insider Scheme Revealed
Illegal-Trading Charges
Leveled Against 13;
Friends' Debt Goes Sour
By RANDALL SMITH, KARA SCANNELL and PAUL DAVIES
March 2, 2007; Page C1
Sounds like they nailed Franklin and he ratted everybody else to cut a deal. Hope it is a solid case and they all do time. This is an insult to those of us who battle it out using PUBLIC info.
From WSJ:
http://online.wsj.com/article/SB117275753436823375.html?mod=mkts_main_todays_mkts_tac
A 'Brazen' Insider Scheme Revealed
Illegal-Trading Charges
Leveled Against 13;
Friends' Debt Goes Sour
By RANDALL SMITH, KARA SCANNELL and PAUL DAVIES
March 2, 2007; Page C1
And these are the same crooks that were whining last month that the regulations were too tight and they were losing business to the City of London.