The SEC, the DoJ and the FBI are going hard after those who allegedly thought it was fun (and profitable) to manipulate the stock of Chinese entities reversing into US listed shell companies.
Benjamin Wey, chief executive of an entity called New York Global Group, was arrested in Manhattan on Thursday. Various family members and business associates are also in the frame, while Wey’s Switzerland-based banker/broker, Seref Dogan Erbek, apparently “remains at large” (which probably just means he’s in Geneva). Read more
If American regulators get their way, Navinder Singh Sarao will spend the rest of his life in prison for having done what generations of traders did before him: post bids and offers that he hoped wouldn’t get filled. Meanwhile, sell-siders who deliberately misled investors about the sorts of loans getting packaged into private-label MBS face little threat of jail, nor do the traders who manipulated Libor. This is not the way to restore investor confidence in the markets.
For the few of you who don’t already know what Sarao has been accused of, it helps to consider a question that DE Shaw supposedly used to ask interview candidates before it got posted to the internet: Read more
The question is rhetorical.
Back in December we were able to share a long, angry letter penned by Vincent Tchenguiz concerning the legal dispute between the Tchenguiz brothers and the Serious Fraud Office. Read more
Well, some people do confuse “tutorial” and “satire” in Wall Street, Liar’s Poker etc
As the FT’s Kara Scannell reports on Monday, Michael Douglas is doing anti-insider trading PSAs for the Feds. Here’s a taste: Read more
Seven hedge fund portfolio managers and analysts have been charged in a $61.8m insider trading scheme as US authorities escalate their crackdown on Wall Street corruption, writes the FT. Agents with the Federal Bureau of Investigation arrested three hedge fund managers in New York, Boston and Los Angeles on Wednesday morning. According to the unsealed complaint, the “circle of friends” once worked together at other investment firms and swapped information about Dell’s first and second quarter 2008 earnings and other technology companies in exchange for tips and cash payments. The criminal charges highlight how US prosecutors and the FBI are escalating their investigation into insider trading, dubbed “Perfect Hedge” and the probe is expected to lead to charges against other individuals, people familiar with the matter say. The Securities and Exchange Commission also filed civil fraud charges on Wednesday. The WSJ journal reports that investigators have enlisted the help of an extensive range people, including those employed at various money managers, as the scope of investigations has widened.
US authorities are expected to arrest three former Wall Street traders as early as next week in an expansion of their insider trading investigation, the FT says, citing to a person familiar with the matter. Insider trading charges are expected to be brought following a raid of the two hedge funds, Diamondback Capital and Level Global, in November 2010, this person said. Since then, agents with the FBI and prosecutors with the US Attorney’s office in Manhattan have won the co-operation of several hedge fund employees, sources told the newspaper, and another person said the investigation is expected to include allegations of improper trading in several stocks, including several trades around one tip that resulted in profits of more than $50m, which would make it one of the biggest single insider trading transactions.
The US Federal Bureau of Investigation is investigating the scandal engulfing Olympus over allegedly excessive payments made to an adviser to the Japanese camera maker when it acquired a UK company in 2008, reports the FT. The FBI probe comes on top of others delving into the circumstances surrounding a total $1.3bn in allegedly suspicious payments made by the 92-year-old Japanese company. The furore began less than a fortnight ago when ousted chief executive Michael Woodford shone a light on the payments, including about $600m to acquire a trio of companies in disparate businesses – all unrelated to Olympus’ high-tech operations – with negligible turnover. On Monday Olympus shares fell to their weakest level since March 1998, according to Reuters.
A legal battle over alleged computer hacking of a US marketing company by a News Corp subsidiary has been referred to US authorities by a senior lawmaker, exposing the company at the centre of the UK phone-hacking scandal to further questions about how it operated in the US, the FT reports. Frank Lautenberg, a Democratic senator, asked the justice department and Federal Bureau of Investigations to examine the details of a case settled between News America Marketing and Floorgraphics Inc, an in-store marketing company. Floorgraphics alleged that its rival hacked its computer system as many as 11 times in 2003 and 2004 to gain business. “I wanted to make sure that you were fully aware of the case of Floorgraphics and News America, as it may be relevant to your current investigation,” Mr Lautenberg of New Jersey wrote to Eric Holder, US attorney general, and Robert Mueller, head of the FBI, in a letter sent on Wednesday.
News Corp has made only “minor mistakes” and handled “extremely well” the crisis that has forced the closure of the News of the World and scuppered its BSkyB bid, Rupert Murdoch told the WSJ, which he owns. The FT reports News Corp chairman and chief executive’s first extended comments on the tabloid scandal came as the Federal Bureau of Investigation opened a probe into a claim that the News of the World may have sought access to messages on phones belonging to victims of the terrorist attacks of September 11 2001. Meanwhile Reuters says the Daily Mail & General Trust plans to launch a Sunday newspaper to fill the gap left by News of the World’s closure.
The Federal Bureau of Investigation has opened an investigation into an allegation that one of News Corp’s British tabloid newspapers may have sought to access to messages on phones belonging to victims of the terrorist attacks of September 11, 2001, the FT reports. “We’re aware of the reports and allegations and the FBI is looking into it,” a FBI spokesman said. The investigation risks adding to the legal and regulatory threats facing the owner of the Fox television network and Dow Jones as a phone hacking crisis that started at a single London tabloid has begun to spread across the Atlantic. The allegation, from a single, unnamed source, that representatives of the News Corp-owned News of the World newspaper unsuccessfully approached a former New York police officer seeking access to the private phone records of 9/11 victims appeared in the UK’s Daily Mirror newspaper earlier this week, but has not been substantiated by other reports.
From the New York Times on Thursday afternoon:
In response to requests from members of Congress and at least one news media report, the Federal Bureau of Investigation in New York on Thursday opened a preliminary inquiry into allegations that News Corporation journalists sought to gain access to the phone records of victims of the Sept. 11 attacks, people briefed on the matter said. Read more
An employee at CME Group has been accused of planning to steal proprietary software and pass it to a Chinese start-up. Chunlai Yang, a 49-year-old naturalised American, has been formally charged with stealing proprietary source code, the FT reports. If convicted, he faces up to 10 years in prison and a $250,000 fine. Mr Yang appeared in a Chicago court on Wednesday morning for a detention hearing, at which no ruling was made. He remains in custody pending another court date on Friday. The case will raise new concerns about cybersecurity after several recent incidents. Google, Sony and Citigroup have been the targets of cyberattacks in recent months.
A former vice-president in Citigroup’s finance department has entered a not guilty plea after being charged with embezzling $19m from the bank and depositing it into his personal account, the FT says. Gary Foster, 35, was arrested on Sunday morning at John F. Kennedy airport in New York after returning from Bangkok. The New York Times says the the incident is yet another embarrassment for a bank that once made its entire work force take an ethics pledge and uses “responsible finance” as a corporate slogan.
That’s a question Reuters’ Matthew Goldstein asks in a special report published Wednesday on how the FBI’s Behavioral Analysis Unit (BAU) is helping the SEC investigate white collar crime.
From the report: Read more
We ask as this was mentioned by Matthew Kluger, the M&A lawyer charged on Wednesday with earning $32m through insider trading. Garrett Bauer, a trader, was also charged with using MNPI — material non-public information, in case you don’t speak the lingo — provided by Kluger to trade in advance of big deals stretching back to 1994. Read more
… as those are the time and day of the week when robberies are most likely to occur.
That’s from the FBI’s just-released bank crime statistics report for full year 2010, which turned out to be a much lousier year than 2009 (for the bank robbers): Read more
The FBI is probing a series of cyber-espionage attacks on at least five major oil, gas and petrochemical companies by hackers based in China, the FT reports. The attacks, which began more than a year ago and are continuing, have succeeded in capturing sensitive financial information, including plans for bidding on drilling rights in specific fields, and production information, such as the configuration of equipment. Reuters says the hack was traced back to China via a server leasing company in Shandong Province that hosted the malware, according to a study by computer security firm McAfee Inc.
Watch out — here comes a late entrant for euphemism of the year.
The FBI arrested four people on Thursday in connection with alleged insider trading, following a further arrest last month. Two of those arrested were employees of Primary Global Research, an ‘expert network firm’. The company has not been charged with any wrongdoing and we don’t know yet what those arrested say about the charges. Read more
The Federal Bureau of Investigation is preparing a nationwide crackdown on mortgage fraud, the latest in a series of efforts to curb lending practices that contributed to the housing meltdown, people familiar with the matter told the FT. Hundreds of people across the US face arrest as early as next week for offences including encouraging borrowers to falsify income on mortgage applications and misleading on foreclosure arrangements, two sources said.
FBI agents arrested the former operations director of Bernard Madoff’s securities firm on Thursday on charges that he falsified records and lied to authorities to conceal a decades-long Ponzi scheme. Daniel Bonventre, 63, also stands accused of securities fraud, conspiracy and filing false tax returns. If convicted on all six counts he would face up to 77 years in prison. Madoff is serving 150 years for the scheme, which cost investors up to $65bn.
The FBI is probing a computer-security breach targeting Citigroup that resulted in a theft of tens of millions of dollars by computer hackers who appear linked to a Russian cyber gang, reports the WSJ. The attack was aimed at Citi’s Citibank subsidiary, which includes its North American retail bank and other businesses. However, Citi denied any breach of its systems, or losing any money, and said the idea of an FBI investigation was untrue. The WSJ, meanwhile, said it was not clear whether the thieves gained access to Citi’s systems directly or through third parties. Hackers also assaulted two other entities, at least one of them a US government agency.
Some 21 individuals and firms are now facing — or have faced — court action stemming out of the investigation into an alleged $20m insider trading ring.
Here’s the re-re-revised complaint from the SEC with details on the sprawling investigation. Get yourself a coffee or something – it’s 50 pages long.
The complaint documents associated with the latest swoop on those allegedly dealing inside make it abundantly clear the FBI has made very extensive use of co-operating witnesses.
In particular, there is bound to be speculation on the identity of someone referred to as “CS-1,” who has been helping the authorities for more than a year. Read more
Okay, this looks like a big one. The FBI and other US enforcement agencies on Friday moved against an alleged insider dealing ring stretching from Wall Street to Silicon Valley, by way of Bear Stearns, IBM and even a Moody’s analyst.
The court documents are here in the Long Room. But running through the details quickly… Read more
From AP (via Fintag) – over the weekend:
Bradley L. Ruderman, 46, surrendered to FBI agents after being named in a wire fraud complaint. He was later released on $500,000 bond.
Ralph Cioffi and Matthew Tannin – the two former Bear Stearns hedge fund managers – have been arrested by agents from the FBI. Cioffi was the funds’ senior portfolio manager, while Tannin acted as his COO.
The WSJ carried a report on Thursday on the suspected content of the indictment against the both: Read more