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New World Record in Insider Trading Idiocy

The only thing to be gained is a Federal Bureau of Prisons identification number.

From executive with one of the world’s biggest pharmaceutical companies to federal convict; it’s a long fall, but a fall that Robert D. Ramnarine is set to take if the SEC’s allegations against him prove true. Ramnarine, of course, is innocent until proven guilty, but the evidence made public by the SEC suggests that he’ll need the reincarnation of Clarence Darrow if he wants any chance to avoid prison. According to the SEC’s press release: (more…)

Michigan Doctors Pay Stupidity Tax

As Glenn Frey sang in the 80’s, “the lure of easy money has a very strong appeal.”

“Stupid” is a word our parents told us not to use, especially in describing our siblings. But it is the only word that fits the conduct of those who engage in insider trading. For that reason, I’ve called the fines that insider traders have to pay a “stupidity tax.” Five physicians in Michigan recently had to pay that tax. According to the SEC’s press release: (more…)

Here’s Their Chance

The SEC has no sense of humor about insider trading.

I’ve covered the entire country in the past few months speaking to various organizations and promoting The Vigilant Investor. There’s always a Q&A at the end of the speech. On the list of the top five questions that I get after those speeches is: “Why hasn’t anyone been prosecuted for the actions that led to the subprime crisis and the Great Recession that followed?” I explain that many criminal charges require proof of a culpable mental state, and that prosecutors may have decided that they cannot prove an intent to defraud. Still, the masses are crying for a prosecution. A story from Reuters suggests a target that, while not related directly to the sub-crime crisis, might satisfy those who want to see a millionaire in handcuffs.  According to Felix Simon of Reuters: (more…)

Former Major Leaguer Tagged in Insider Trading Case

Insider trading strikes at the integrity of the markets.

Jeff Richardson played professional baseball between 1986 and 1995. Up and down between the minors and the big leagues, he saw limited action in the majors as a utility infielder for the Reds, Pirates, and Red Sox. He retired during the 1995 season. His career stats include a batting average of .176, two home runs, and 13 runs batted in. A native of Grand Island, Nebraska, Richardson returned to Grand Island after his retirement. It was there, according to SEC, that he learned inside information about Genesis Energy LP, whose units trade on the New York Stock Exchange under the ticker symbol GEL. The SEC’s press release details what the Commission believes that Richardson did with that information. (more…)

Academic Study Suggests Many Hedge Funds Engage in Insider Trading

Are you surprised? If so, you have yet to grasp that the securities industry is irretrievably broken, tilted so far in favor of institutional investors that individual investors could be forgiven for choosing to bury their money in coffee cans in the back yard rather than risk playing the dupe to a hedge fund that is trading on inside information.

Last week the Wall Street Journal published a story about the soon-to-be released paper by Debarshi Nandy, Nadia Massoud, Keke Song, and Anthony Saunders, revealing that hedge funds that lent money to public companies sometimes bet against the borrower’s stock before the public announcement of the loan.  The study, which will be published in the Journal of Financial Economics, found: (more…)

Another Trader Pays the “Stupidity Tax”

A]midst rumors that Microsoft would miss its earnings estimates for the quarter that had ended on March 31, Samberg emailed David Zilkha, seeking information about whether Microsoft would meet its earnings estimates. At the time, Zilkha was a Microsoft employee who had accepted an offer of employment from Pequot.

The news this weekend included the story of the Disney employee who allegedly sent an email to several hedge fund managers offering to provide nonpublic inside information about Disney’s earnings announcements in exchange for a “fee,” to be negotiated.  The good news is that several of the hedge fund managers called the SEC rather than take the bait.  The bad news is that not every hedge fund manager says no to such offers.
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Computer Hacker Tagged for Insider Trading

If you remember the movie Wall Street, you remember Budd Fox (Charlie Sheen) dressing up as a supervisor on a maintenance crew to gain access to sensitive information in the offices of a law firm that handled mergers and acquisitions work.

If you remember the movie Wall Street, you remember Budd Fox (Charlie Sheen) dressing up as a supervisor on a maintenance crew to gain access to sensitive information in the offices of a law firm that handled mergers and acquisitions work.  He looked for, and found, information that allowed his boss, the infamous Gordon Gecko (Michael Douglas), to trade based on that inside information.  These days Fox could have done the same work sitting on his couch in his pajamas.  The U.S. Securities and Exchange Commission (“SEC”) has established that one man did just that.   (more…)

On the Lam for Five Years, Scott Frye Returns to Face Securities Fraud Charges

On the Lam for Five Years, Scott Frye Returns to Face Securities Fraud Charges

Scott Frye left the United States shortly after Alabama regulators charged him with defrauding several Alabamians out of their retirement savings.  He ran to the Philippines where he felt safe enough to start at least two pornographic websites (hardly the actions of someone who thought the law was hot on his trail).  He is now back in the United States having been arrested in Manila several months ago.  With the help of Philippine law enforcement, the FBI nabbed Frye and is returning him to Alabama to face the charges against him. (more…)

SEC Charges Two Sacramento Men with Stealing $10 Million

SEC Charges Two Sacramento Men with Stealing $10 Million

According to the U.S. Securities and Exchange Commission, Lawrence “Lee” Loomis and his father-in-law John Hagener defrauded 100 investors out of $10 million by soliciting investments in supposed loans to homebuyers to be secured by real estate deeds of trust. According to the SEC, the defendants told prospective investors that the investments would be put into safe “liquid high-yield accounts” earning 12 percent and that the investments were guaranteed by a third party. (more…)

The Wrong Kind of Help

This time last year four people (three men and a woman), clad in bullet proof vests, wearing ear-pieces, and sporting at least one stun gun walked into the Folsom, California offices of Equity Investment, Management and Trading Inc.,  operated by accused Ponzi artist Anthony Vassallo, and said that they worked for the FBI and the Securities and [...]

This time last year four people (three men and a woman), clad in bullet proof vests, wearing ear-pieces, and sporting at least one stun gun walked into the Folsom, California offices of Equity Investment, Management and Trading Inc.,  operated by accused Ponzi artist Anthony Vassallo, and said that they worked for the FBI and the Securities and Exchange Commission.  They demanded that Vassallo wire more than $300,000 to a specified bank account.  Vassallo wired no money.  Likely, there was no money left.  As it turns out, the four were trying to recover the investments of four victims of the alleged Ponzi scheme.   (more…)

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