Tag: insider trading

Former NASDAQ executive gets 42 months for insider trading

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A former Nasdaq executive has been sentenced to 3-1/2 years in prison after pleading guilty for making hundreds of thousands of dollars by trading on confidential information.

Donald Johnson, 57, was director and then managing director of Nasdaq’s market intelligence desk before retiring in September 2009. In May he pleaded guilty to one count of securities fraud for his scheme, which ran from 2006 until 2009.

He was responsible for monitoring the stocks of companies traded on the Nasdaq as well as giving the companies information and analyses about trading in their stocks. As a result, Johnson received advance information about upcoming companies’ earnings, news releases and personnel changes.

Federal prosecutors accused him of using that inside information on at least eight occasions, reaping $641,000. Securities regulators said there was a ninth illegal trade that brings the total ill-gotten gains to just over $755,000…

Judge Anthony Trenga sentenced Johnson to serve 42 months in prison followed by one year of supervised release. The judge also signed a forfeiture order for the $755,000 amount…

Johnson is the latest high-profile prosecution in a string of cases brought by the Obama administration in a bid to crack down on insider trading.

Over at the Big Blog – and many other sites that halfway cover American business [or is that halfassed?] I have given up trying to correct the ignorant who constantly prattle about nothing ever being done about corruption on Wall Street.

Yes, there could be 10 times the prosecution and conviction of crooks. The leftovers from Bush-era SEC management still infests the Street. But, that’s as much a function of budgets still limited by Republican and Blue Dog Democrat conservatives who fear the hand of Zardoz descending upon them for daring to fightback against corruption.

Meanwhile, I continue to record a portion of these clowns sent up the river for their crimes.

DOJ puts three more Wall Street Wizards away for insider trading

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Zvi Goffer – nicknamed “octopussy”

Three former securities traders were convicted on Monday on all counts of fraud and conspiracy to commit insider trading on pending mergers, in another victory for prosecutors in their probe of suspicious trading on Wall Street.

Brothers Zvi Goffer and Emanuel Goffer and a third trader, Michael Kimelman, their former partner at trading firm Incremental Capital LLC, chose to go to trial when dozens of other defendants in the broad probe have pleaded guilty…

The central defendant in the government’s probe is Galleon Group hedge fund founder Raj Rajaratnam, who was convicted last month of insider-related charges, also in Manhattan federal court.

With Monday’s verdicts, every defendant who was arrested in October and November 2009 in the Galleon probe has been convicted. One man remains at large.

A jury convicted Zvi Goffer, 34, a former Galleon Group trader, of two counts of conspiracy and 12 counts of securities fraud for activities between 2007 and 2009.

Prosecutors said he was a ringleader who paid tens of thousands of dollars in bribes to two Ropes & Gray lawyers to learn what corporate deals the law firm was working on. The lawyers, Arthur Cutillo and Brien Santarlas, have pleaded guilty to criminal charges.

Emanuel Goffer, 32, was convicted on one conspiracy charge and two securities fraud counts. Michael Kimelman, 40, was found guilty of conspiracy and two counts of securities fraud. Kimelman had rejected a plea deal soon before the trial began on May 16.

“We will continue to work tirelessly with our partners at the FBI to root out corporate corruption on Wall Street and to hold privileged professionals who gallop over the line accountable for their actions,” Manhattan U.S. Attorney Preet Bharara said in a statement…

Every generation or so, there are lessons to be taught about insider trading, said Brian Quinn, assistant professor of law at Boston College…

“It is incredible to me every time I read these transcripts that people realize they are violating the law, but think no one is watching,” he said.

During most of the Bush years and probably a chunk of those preceding you pretty much could count on little oversight, even less enforcement and a slap on the wrist from the SEC and the Department of Justice.

No one was watching. Or listening.

Wall Street’s expert networks differ from insider trading – how?

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Danielle Chiesi, co-defendant in the Galleon scandal compares insider trading to an orgasm
Daylife/AP Photo used by permission

It is July 21, 2009, and one Wall Street hedge fund manager has a sudden change of heart. Having bought more than 1m shares in the giant technology company AMD over the past two weeks, the trader loses confidence in his bet and swiftly dumps a third of his stake.

The volte-face immediately looks shrewd. As the markets close that evening, AMD makes a quarterly earnings announcement admitting to a $330m loss and a 13% drop in revenues. One day later, AMD shares slump 13%, meaning the hedge fund manager had avoided losses of at least $140,355.

Despite appearances, the unnamed trader’s move may have been neither clever nor lucky: in the hours preceding AMD’s announcement, the seller had conducted a 10-minute phone call with one Mark Anthony Longoria, who is AMD’s supply-chain manager.

That case is now part of the huge insider-dealing inquiry fixating Wall Street, which became even more sensational last week when the US securities and exchange commission filed civil charges against Rajat Gupta, the former head of the management consulting firm McKinsey.

Gupta, who denies any wrongdoing, is alleged to have passed corporate secrets learned as a board member of Goldman Sachs to Raj Rajaratnam, the founder of the Galleon hedge fund, whose own trial on several counts of fraud and insider trading is due to start on Tuesday…

The 44-year-old from Round Rock, Texas, made the fateful AMD call while moonlighting as a paid consultant for Primary Global Research (PGR), a so-called “expert network” firm that matches industry experts with money managers looking for “informed” corporate news…

The business practice is perfectly legal, unless inside information is exchanged and used, but increasingly there are suspicions that impropriety is occurring more often than regulators would like…

Some parts of the money industry admit to 30% of profits being made via illicit if not illegal means. The corporate frontmen swear aloud on a stack of bibles that they will visit fire and brimstone upon anyone proven guilty of lawbreaking.

The fact remains that unregulated trades in the only commodity important to world commerce – money – continue without oversight. As long as that is a basic premise of world finance, the opportunity for crime and truly valueless stock markets persists.