SAC Capital is a hedge fund giant based in Connecticut. The company has been the source of a growing investigation into securities fraud based on insider trading. A 40-year-old portfolio manager was arrested this week and has been charged with conspiracy and securities fraud. The Federal Bureau of Investigation has alleged that the man participated in an "elite criminal club" wherein a network of analysts funneled insider information and private financial data to SAC professionals.
Our last post introduced the four big categories that experts believe will dominate white collar crime developments in the upcoming year. These broad categories include LIBOR manipulation cases (discussed in the previous post), corruption and bribery, insider trading, and misconduct by rogue traders.
The last year saw a number of large-scale white collar crime prosecutions around the nation. For example, criminal cases centered on a rogue trader's risky loss of $2.3 billion while a number of medical companies ran into trouble for corruption and bribery. As professor Peter Henning wrote in the New York Times, the development of a major white-collar crime case in 2013 is simply "a question of when."
With the massive resources available to the FBI and Department of Justice, it should come as no surprise that federal authorities are opening a big new door in their search for fraud cases. Reuters is reporting that the FBI is focusing a new investigative effort on Twitter and other social networks.
Steven Cohen and his legendarily successful firm, SAC Capital Advisors, have attracted attention from government agencies for years. As the Wall Street Journal reported, "regulators have suspected that [Cohen's] success partly stemmed from insider trading." SAC Capital has been in the news twice in the last week. Just days after federal authorities announced a criminal case against one of its former portfolio managers named Matthew Martoma, the firm disclosed that the SEC is also considering a civil case against it for fraud.
This is the second post covering an ongoing trial that accuses two financial professionals of using insider information to illegally earn $67 million in profits. The last post briefly explained insider trading charges and this one will look at the use of wiretap devices in large fraud cases.
A massive criminal prosecution is going to trial this week in a case that started two years ago with the FBI's raids on several prominent hedge funds. Authorities are accusing two fund co-founders of earning more than $67 million by engaging in illegal insider trading.
Another hedge fund manager with ties to the Galleon Group has been charged for illegally profiting from inside information. The white collar criminal charges carry a potential prison sentence of 25 years. Allegedly, the man was given earnings information and other confidential business knowledge concerning Google and Polycom. He is accused of using that information in stock trades from 2006 to 2009. He is also accused of passing along insider information concerning Marvell Technology Group Ltd. The person who provided him with the insider knowledge has connections to Raj Rajaratnam who was convicted last May in a case that drew national headlines.