Insider Trading: An Easy Offence To Commit

October 2011

Newsletter 14 View ‘Insider Trading: An Easy Offence To Commit [PDF] ’

Excerpt:

Light touch regulation is a thing of the past. Insider trading is being targeted in the criminal courts as never before. In the USA, 53 people have been convicted or pleaded guilty since 2009, spawning a new cast of financial gangsters: enter
Samir “shred as much as u can” Barai, Zvi Goffer (aka ‘Octopussy’ for his many tentacles into inside sources) and the multi-billionaire head of the Galleon hedge fund himself, Raj Rajaratnam.1 In the UK, after nearly a decade of inactivity in the area, the Financial Services Authority (FSA) is currently prosecuting 13 individuals for insider trading in the criminal courts, having secured 1 convictions in the past couple of years alone.2

The results are coming through. For the past four years, suspicious trading ahead of UK mergers and acquisitions has been set at about 30%. This year that figure has been slashed by almost a third to 21%, the lowest level in eight years.3
The compliance industry is booming.

However, criticism of the aggressive tactics that are achieving these results is beginning to mount. One hedge fund had to wind down after the fall out from a raid. Preet Bharara, the US attorney with jurisdiction over Wall Street, stated that if an institution was that “fragile” then the answer was to be “more careful and scrupulous” than everybody else.4 It is not, therefore, just those that cross the line who need to watch it: those straying nearby may receive the same brutal treatment.

View ‘Insider Trading: An Easy Offence To Commit [PDF] ’