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The insider trading scandal began with shock and awe. Each week brought a raft of indictments. Well-stationed members of society were exposed as frauds and criminals. With insider trading its most visible focus, the legal violence against the finance industry continues. And like so many TV-addled teenagers, the public may now have lost the ability to respond.
An apathetic public, however, is no a reason to stop. Just because insider trading is no longer shocking doesn’t mean we shouldn’t prosecute it to the full extent of the law. But the failure to shock is also not a reason to search for a response by expanding the definition of insider trading. Read the rest of this entry »
You’re a JD candidate. You expect it will provide for a predictable and lucrative career despite the massive price tag. However, law school hardly looks like the ticket it once was. With law firms shrinking around the country, clients insisting on flat rates, and a new wave of highly sophisticated outsourcers, both domestic and international, not only are there fewer jobs, those that do emerge are less stable and less remunerative. Whoops!
Then the news cycle begins. Expert networks, once an obscure service to a niche industry, find themselves in the middle of a string of insider trading investigations. Read the rest of this entry »
Khuzami went further at the hearing and declared that “anybody who is beating market indexes by 3 percent and doing it on a steady basis” could be a suspect
–From Roger Lowenstein’s piece on Insider Trading in the NYT
A former financial analyst at NVIDIA pleaded guilty today of criminal conspiracy and insider trading charges. Sonny Nguyen, 39, agreed to provide material nonpublic information he gathered in his role at NVIDIA to peers in an insider trading ring that allegedly spanned, among others, Winifred Jiau, a commonly used expert Primary Global Research LLC network of consultants.
Though “Wini” has not yet plead guilty, she has come under allegations of participating in and promoting insider trading through her engagement with Primary Global. It seems that Nguyen was perhaps one of whom she meant when she was quoted as saying, “As soon as I get it, I give you guys a buzz.”
It would almost seem that the probe is widening, but it’s not. If anything, it appears to be narrowing.
Today’s news began with open speculation by the WSJ that investigators shifted their focus to the principals of Primary Global: Unni Narayanan and Phani Saripella. The shift would appear to match the circumstances. Nguyen claims to have provided Wini inside information. Sam Barai, best known for his colorful instructions to his analyst who had been cooperating with investigators, pleaded guilty today and, according to the WSJ, “the probe of Messrs. Narayanan and Saripella, both former employees of Intel Corp., is being aided by one of their former clients, former hedge-fund founder Sam Barai.”
Investigators have illuminated what looks like a rich vein of corruption, circumscribed by a series of bad actors, both admitted and alleged. If no more convictions come of this, at least it will serve as a lesson describing the importance of compliance policies, procedures, and systems organized by industry-leaders, such as Gerson Lehrman Group, when speaking with outside experts, and at most, it may provide the contours of a gripping movie.
Even inside information from an ‘expert network’ would not have helped.
–Yves Smith, Naked Capitalism
Not even an expert network would have helped, says Yves Smith of the earthquake in Japan, rather blithely suggesting that an expert network is nothing more than a vehicle with which to exchange material non-public information. Would it were the case. If only inside information equated to expert networks, imagine how easy enforcement of insider trading would be! Shut down the networks, Smith might say, and we will purge the rot of a rigged game from the system.
But inside information and expert networks are different things. To conflate them is a failure of analysis and a lazy view on the role of expert networks, the problem of inside information, and research in general. Read the rest of this entry »
Is the smoke clearing for expert networks?
From a modest hotel room in the Omni Shoreham in Washington DC, the SEC gathered a smattering of reporters, lobbyists, and others for a best practices seminar. But the somber title belied a dramatic observation to be made by an SEC official on expert networks. They’re not the problem.
Carlo di Florio, director of the U.S. SEC Office of Compliance Inspections and Examinations, spent just over six thousand words on reforms made under Chairman Mary Schapiro, the implementation of the Dodd-Frank Act, the focus on examination and training, and various enforcement actions in the advisory community. And then, almost 6000 words in and nearing his final remarks, he decided to “briefly mention the ‘Expert Network’ insider trading cases that the Commission and the Department of Justice have recently brought, and that have received much recent press coverage.”
Contrary to some reports that I have seen, I believe these cases do not represent some inherent hostility by the Commission toward expert networks Read the rest of this entry »
DealBook: How Far Will Insider Trading Inquiry Expand?
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