Efforts by federal prosecutors led to the indictment of seven individuals last week. The white collar criminal case surrounds the actions of a stock analyst and several of his friends. The group obtained inside information about Dell and its financial results and used that information to obtain roughly $62 million in illegal gains on the stock market.
The insider trading scheme was discovered as part of the long-running government campaign nicknamed "Operation Perfect hedge." The head of the Federal Bureau of Investigation has made it clear that everyone who has engaged in insider trading is a target and should expect to face criminal charges at some point. Several of the people charged in this investigation have entered guilty pleas and are currently cooperating with law enforcement officials.
The majority of the illegal profits generated by this group went to a hedge fund that was founded by former employees of SAC Capital traders. SAC Capital has seen several of its traders and executives accused of white collar crime in recent years. The firm issued a statement saying that it was cooperating with the investigation.
Insider trading is being heavily pursued by federal investigators. This operation alone has led to at least 60 convictions and guilty pleas. In a field where many of the top players share information, each new conviction spawns other investigations and arrests. Between the FBI and the SEC, the government scrutinizes many investments. A person's success alone can inspire a closer look. Those accused face stiff penalties and experienced investigators doing everything they can to get a conviction.
Source: The New York Times, "U.S. Charges 7 for Insider Trading of Dell Stock," by Peter Lattman and Azam Ahmed, 18 January 2012