(M)embers of Congress, who often gain access to inside information about a company while they are lobbied and who also have some ability to influence the fate of companies through legislation, return a profit on their investments that beats market averages by 5 to 10 percent per year, a remarkable rate that would make even Bernie Madoff blush.
Nate Silver, “The Signal and the Noise,” page 342. (via joshsternberg)
The STOCK Act, passed by a heavy margin to hopefully curtail congressional insider trading, has encountered legal challenges since last year’s passage, and full implementation won’t occur until April 2013.
» Raj and Rajat: Back in 2011 Raj Rajaratnam, the founder of the once-colossal Galleon Group hedge fund management firm, was sentenced to 11 years in prison for insider trading. Rajaratnam had gained choice information unavailable to the public at large by using a series of secret contacts – one of whom, Rajat Gupta, has now faced the music himself. Prosecutors successfully argued that Gupta, a former board member of both Goldman Sachs and Procter & Gamble, was one of Rajaratnam’s sources, leaking him the details of Goldman’s first-ever quarterly loss in late 2008. Convicted on four out of six counts of insider trading, Gupta will likely face prison time when sentenced later in the year.
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President Barack Obama on Wednesday signed into law a ban on insider trading by members of Congress and their staff.
The law, the Stop Trading on Congressional Knowledge Act, explicitly says that members of Congress and their staffs are not exempt from the prohibition of insider trading placed on everyone else.
“We were sent here to serve the American people and look out for their interests—not to look out for our own interests,” Obama said when signing the legislation.
The law mandates that government employees and members of Congress report investment transactions within 45 days of making a trade, instead of the annual basis under the old law. Information in public financial disclosure reports must be made available on agency websites under the law, according to a fact sheet issued by the White House.
Good move. This needed to be done.
Members of Congress can legally trade stock based on non-public information from Capitol Hill.
As Lizzie O’Leary points out, much of this report owes its information from the work done by Brody Mullins at the Wall Street Journal:
Friends, read up on this story this morning. This is important. This is a major loophole in the law that proves most of the arguments we might have about the financial system. And thanks to “60 Minutes” doing such a thorough report on it, it’s now something that the public will now be able to act upon. Many people are named in the report, including John Boehner and Spencer Bachus.
thenoobyorker says: I would love to see this not end with Rajaratnam, they may use him as an example but there are others that could/ should go to jail as well.
» SFB says: Assuming that’s how a lot of people feel about the situation. There were a lot of people who did bad things during this era. How it seems to us that financial industry crimes tend to happen is that someone takes the fall for something that goes way beyond that person. In a lot of ways, that’s what the Occupy movement seems to be about — not letting that simply happen. — Ernie @ SFB
Ex-Hedge fund trader Raj Rajaratnam could get huge prison sentence: The U.S. government wants Rajaratnam, center, to receive between 19 and 1/2 years and 24 and 1/2 years for his insider-trading crimes, considered to be the worst since the 1980s. Is that enough? source
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Today’s front page: Great to see the Washington Post doing this. It reminds us of an old friend of ours.
Raj Rajaratnam, the billionaire investor who once ran one of the world’s largest hedge funds, was found guilty of fraud and conspiracy on Wednesday by a federal jury in Manhattan. He is the most prominent figure convicted in the government’s crackdown on insider trading on Wall Street.
Mr. Rajaratnam, who was convicted on all 14 counts, faces up to 25 years in prison when he is sentenced.
This is the biggest blockbuster insider trading case since Bud Fox got nailed back in 1985.
Hey, insider trading fans: Keep an eye on this dude’s trial!: The trial of Raj Rajaratnam, the founder of the Galleon hedge fund, starts today. Raj reportedly made $45 million in illicit profits – the worst case of insider trading in a generation. source
I can’t add much to what’s already been (and will be) ...
One of the perks of being an early employee...
Over the last 90 days, the Digg...
#FMMDI (at 30 Rockefeller Plaza)
Thanks. I guess my thoughts are as follows:
1. I think...
Two Months Ago I set out to interview the principal cast...
minusmanhattan asked: I guess they didn’t have a shredder?
» We say: Hard drives and flash drives don’t really work with shredders. He had to put more work into it than that. On the plus side for him, finding those hard drives is going to likely be impossible now, but on the down side, the messages he reportedly sent to the snitch are probably proof enough.
Oh it’s easy. You take two pairs of pliers, and then you rip it open. Put ‘em into four separate little baggies, and then at 2 a.m…. 2 a.m. on a Friday night, I put this stuff inside my black North Face jacket, … and leave the apartment and I go on like a 20-block walk around the city … and try to find a, a garbage truck. And threw the @*^! in the back of like random garbage trucks, different garbage trucks … four different garbage trucks.Hedge fund manager Donald Longueuil (reportedly) • In a series of messages explaining how he got rid of key evidence in an insider trading case. The details, from a government complaint, were unsealed today. He reportedly trolled the streets of Manhattan looking for a way to throw away a bunch of documents, including a flash drive and two external hard drives. So he chose to destroy them and throw them away in separate garbage trucks in the middle of the night. Sounds like our kind of party. Too bad the guy who he reportedly explained this to was cooperating with authorities. Oops. source (via • follow)
You know Countrywide? Of course you do, if you have any knowledge of big evil companies that screwed millions of good people by convincing them to get into subprime mortgages. Before the proverbial doo-doo hit the fan, the company’s former CEO, Angelo Mozilo, cashed out big time, using his insider knowledge to ensure a big payday. Now, a couple years after the fact, the SEC twisted his arm until he agreed to forfeit a bunch of that money. The details:
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