The SDNY Circus Continues

"Armed with informants, wiretaps, and sophisticated software tools, the [SEC]--still smarting after missing Bernard Madoff's Ponzi scheme--is determined to raise its game. 'It would be wise for investment advisers and corporate executives to look closely at [the Galleon] case and consider what lessons can be learned and applied to their own operations,' SEC enforcement chief Robert Khuzami said in a press conference. ... Notes Wayne Black, a private financial-crime investigator and former drug cop: 'The fact that they used the stuff you see for mobsters, drugs, and terrorism shows their very serious'," Roben Farzad & Theo Francis at Businessweek, 2 November 2009.

"Federal authorities widened their crackdown on insider trading, uncovering an alleged network of conspirators with elements of a James Bond movie, including packages of money, throwaway cellphones, a ring-master named 'Octopussy' and an associate called 'the Geek.' In a 24-page criminal complaint filed in New York federal court, prosecutors alleged that 14 individuals were part of an insider-trading group that generated $20 million in illegal profits. The group allegedly included several hedge-fund traders, two lawyers, a former junior analyst at a credit-rating firm and a technology-company executive. ... 'The casual betrayal of corporate secrets by insiders ... makes a mockery of our system,' said Preet Bharara, the Manhattan US attorney, at a news conference announcing the charges. A related civil case was filed by the [SEC]", my emphasis, Robert Guth & Amir Efrati at the WSJ, 6 November 2009, link: http://online.wsj.com/article/SB125742913148830787.html.

"The government's fast-moving insider-trading case is being built on information from five co-operating witnesses, some of whom received information from investors and companies that haven't been charged in the probe, potentially broadening the case, people familar with the matter said. ... The cooperators have pleaded guilty to charges including conspiracy and insider trading and are cooperating in the hope of getting lighter penalties, investigators say. ... The complaint alleges that Messrs. [Choo-Beng] Lee and [Ali] Far paid some of their sources $2,000 per quarter in exchange for information", Susan Pulliam at the WSJ, 6 November 2009, link: http://online.wsj.com/article/SB125746971902632491.html.

Black, I disagree. It appears the DOJ and SEC are acting to convince Joe Schmoe the Feds are serious about white collar crime. What should a prospective white collar criminal do to ward off the Feds? Have some Vampire Squid (VS) higher-ups take part in your scheme such that it you can't be prosecuted without bringing VS down too. Who says VS is good for nothing? Well Preet Bharara (PB), will you indict me for aiding and abetting say wire fraud, 18 USC 2, 1343? Doesn't the US Attorney's Manual state no VS senior executive should be prosecuted? Or is that in the Manual's "confidential" section?

Aparently PB has nothing important to do that he can waste time on this case. By going after some "high profile" types like the Galleon people, he diverts Joe Schmoe's attention from VS. PB, you are making a mockery of our system.

$2,000 per quarter. Wow. Lloyd Antoinette Blankfein's monthly cigar bill must be 100 times larger. This case shows one problem with DOJ prosecutors. They can't make a case without "co-operating witnesses". Well, PB, which VS can you get to co-operate?