Skip to main content

Lucky 7: The Insider-Trading Schemes That Paid the Most

As everybody knows, insider trading is the easiest way to make big bucks in the stock market. Here are some of the celebrated cases of alleged insider trading worldwide:-

1) Mathew Martoma: The hedge fund manager is charged with trading on inside information from a doctor who was working on a joint-drug trial with Elan Corp. and Wyeth on the development of an Alzheimer’s drug. Based on the information, Mr. Martoma led his firm CR Intrinsic and an affiliated investment adviser to liquidate their positions in both companies and to take short positions, according to prosecutors and SEC attorneys.

All told, the hedge funds allegedly made profits and avoided losses of more than $276 million, according to U.S. officials. Mr. Martoma’s attorneys said in a statement, “Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain.”

2) Raj Rajaratnam: His remarkable journey from Sri Lanka to the heights of the hedge-fund world to convicted felon ended in October 2011 when he was sentenced to 11 years in prison, then the longest-ever term imposed in an insider-trading case. Prosecutors said Mr. Rajaratnam, founder of Galleon Group, reaped $72 million in illegal profits and losses avoided from his insider trading. Mr. Rajaratnam’s lawyers argued that only about $7.46 million in alleged gains shouldhave been attributed to him personally.

3) Todd Newman: A former portfolio manager with Diamondback Capital Management LLC, who is currently on trial with Anthony Chiasson, a co-founder of Level Global Investors LP, for allegedly sharing and trading on confidential information about technology stocks. About $70 million in profits was made in the alleged scheme, according to prosecutors. Messrs. Newman and Chiasson have pleaded not guilty to conspiracy and securities fraud charges.

4) Ivan F. Boesky: The inspiration for Wall Street’s Gordon Gekko, Mr. Boesky was sentenced to three years in prison in 1987 for conspiring to file false stock trading records. A year earlier, he had settled civil insider-trading charges with the SEC, paying a record $100 million. The SEC said he earned more than $50 million by trading inside information he bought from an investment banker.

5) Matthew Kluger: A former corporate lawyer who profited from his inside knowledge of corporate deals handled by the law firms he worked for over a 17-year period. Mr. Kluger was sentenced in June to 12 years in prison, the current record sentence in an insider-trading case. Garrett Bauer, a 44-year-old former trader who received Mr. Kluger’s tips through a middleman, pleaded guilty in the scheme and was sentenced to nine years in prison. The scheme netted the participants $32 million in profits, the bulk to Mr. Bauer, prosecutors said.

6) Joseph “Chip” Skowron III: He was sentenced to five years in prison in November 2011 after admitting to using secret tips from a French doctor working on clinical-drug trials to avoid millions of dollars in trading losses. (Sound familiar?) A former manager at hedge fund FrontPoint Partners, Mr. Skowron directed several FrontPoint health-care funds to dump millions of dollars of shares in biotechnology company Human Genome Sciences Inc. in 2008 based on the inside information. 

He avoided about $30 million in trading losses, prosecutors said.

7) Zvi Goffer: A former employee at Galleon whom prosecutors called the “ringleader” of an insider-trading scheme involving traders and lawyers, Mr. Goffer was sentenced to 10 years in prison in 2011 after being found guilty of 14 counts of conspiracy and securities fraud. His brother Emanuel Goffer and Michael Kimelman, who were both traders, were each convicted of conspiracy and two counts of securities fraud. In a related civil complaint, the SEC said one part of the scheme, based on tips from corporate lawyers, netted more than $20 million in illegal profits

Remember that these are the once which have come out into public domain. There are hundreds which never get caught.

http://profit.ndtv.com/news/banking-finance/article-state-run-foreign-banks-hit-by-bad-loans-rbi-313160

Comments

Post a Comment

Most viewed this month

Deposit Of Minimum 20% Fine/Compensation U/s 148 NI Act Mandatory

In OP(Crl.).No.348 OF 2019, T.K.SAJEEVAN vs FRANCIS T.CHACKO, the appeal was filed against the order of the lower court to deposit 25% of the fine before filling of appeal. The appellant argued that the deposit introduced through the Section 148 of the NI Act after amendment was directory in nature as it used the term 'may' while mentioning the issue of deposit. The Kerala High Court however disagreeing held that in view of the object of the Legislature while incorporating Section 148 into N.I. Act, the word 'may' will have to be read as 'shall'. The imposition of payment contemplated under Section 148 N.I. Act cannot be restricted to some prosecutions and evaded in other prosecutions. Since the amount directed to be deposited being compensation, undoubtedly, it is liable to be ordered to be deposited irrespective of the nature of the prosecution. Therefore, the word 'may' can only be taken to have the colour and meaning of 'shall' and there
Post a Comment
Read more

NCLT - Mere admission of receipt of money does not qualify as a financial debt

Cause Title : Meghna Devang Juthani Vs Ambe Securities Private Limited, National Company Law Tribunal, Mumbai, CP (IB) No. 974/MB-VI/2020 Date of Judgment/Order : 18.12.2023 Corum : Hon’ble Shri K. R. Saji Kumar, Member (Judicial) Hon’ble Shri Sanjiv Dutt, Member (Technical) Citied:  Carnoustie Management India Pvt. Ltd. Vs. CBS International Projects Private Limited, NCLT Swiss Ribbons Pvt. Ltd. & Anr vs. Union of India & Ors. (2019) Sanjay Kewalramani vs Sunil Parmanand Kewalramani & Ors. (2018) Pawan Kumar vs. Utsav Securities Pvt Ltd 2021 Background Application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 alleging loan of Rs, 1.70 cr is due. The Applicate identified herself as the widow and heir of the lender but could not produce any documents proving financial contract between her Late husband and the CD but claimed that the CD has accepted that money was received from her husband. The applicant subsequently filed rejoinder claiming the debt t
Post a Comment
Read more

Jurisdiction of consumer forum is not ousted even if the other party has filed suit on the same matter in Civil Court

In Yashwant Rama Jadhav v. Shaukat Hussain Shaikh, First Appeal No. 1229 of 2017, decided on 18.11.2017,  the grievance of the petitioner before the National Consumer Disputes Redressal Commission was that appellants/complainants had entered into agreements with the respondents for purchase of residential flats, which the respondents were to construct and despite paying the substantial amount to the respondents, the construction of the flats had not been completed. The State Commission dismissed the complaints and ruled in favor of respondents against which the appellants approached the National Commission. The NCDRC held that Section ‘3’ of the Consumer Protection Act, to the extent it is relevant provides that the provisions of the Act shall be in addition and not in derogation of the provisions of any other law for the time being in force. Thus the remedy available under the Consumer Protection Act is an additional remedy, which Parliament has made available to a consumer. Even
Post a Comment
Read more