20 people, including attorneys and Wall Street professionals, are reportedly facing criminal charges in a widening $53 million insider trading case.
14 people, including attorneys and Wall Street professionals, are
reportedly facing criminal charges in a widening $53 million insider trading case that has already snared one of the richest men in America.
The arrest of those 14 people brings the number of people arrested in the case to 20. Last month Galleon Group founder and hedge fund operator Raj Rajaratnam and five others were charged in the case.
Last month, U.S. Attorney Preet Bharara
referred to the first arrests as "a wake-up call for Wall Street." Now he says that "the alarm bells have only grown louder."
Bharara alleges that total profits were $40 million but the Securities and Exchange Commission (SEC) raised the total to $53 million. The figure from the SEC includes millions in profits that were not described in the criminal complaints.
It's not known yet if the insider trading case was the tip of the iceberg of illicit trading on Wall Street but the U.S. Attorney's Office aims to find out.
Others Paid to Obtain Secrets about Planned Mergers and Acquisitions
Eight people were arrested Thursday on securities fraud charges and five others who are cooperating have already plead guilty. One person is still at large.
Rajaratnam is currently free on $100 million bail. Through his lawyer, he denied participating in an insider trading scheme to trade stocks at a profit ahead of public announcements.
According to the
report, court papers filed Thursday in U.S. District Court in Manhattan reveal that Zvi Goffer operated an insider trading network in 2007 and 2008 that included a lawyer who fed tips gleaned from his firm's work on acquisition deals.
In 2007 Goffer worked at Shottenfeld Group LLC in Manhattan. For the first nine months of 2008 he worked at Galleon Group before starting his own trading firm.
A criminal complaint that was
reportedly prepared by FBI Agent David Makol alleges that Goffer paid others to obtain secrets about public companies' planned merger and acquisition activity that was then used for executing profitable securities trades.
Prepaid Cellular Phones used to Reduce Chances of having Communications Detected
Agent Makol's complaint says that Goffer provided prepaid cellular telephones to conspirators to reduce their chances of having their communications detected by law enforcement.
Arthur Cutillo, a lawyer with Ropes & Gray, a law firm that held secrets regarding mergers and acquisitions, was named in the complaint as one of those who fed Goffer tips, including information regarding the announcement in September 2007 that Bain Capital Partners LLC would be acquiring technology company 3Com. The complaint says that Cutillo fed tips to another lawyer who then relayed them to Goffer.
A confidential informant and three court-authorized wiretaps helped the government break the case. The informant, who
reportedly executed trades based on insider information while working at a hedge fund, has been cooperating with the FBI since July 2007, has agreed to plead guilty to charges of conspiracy and securities fraud and hopes to get leniency.
Now that Wall Street has supposedly received its wake-up call and the alarm bells are growing louder, will
Goldman Sachs' 'secret' bets on the U.S. housing market crash be investigated?
