Press Release from New York U.S. Attorney's Office http://www.usdoj.gov/usao/nys/pressreleases/March07/ubsinsidertradingpr.pdf
Real life examples of this actually point to a more efficient market. Certain minimal regulations are needed however, to prevent company insiders from manipulating and lying ahead of information. And this is what people like flytiger fail to realize. It's all a well pre-planned scheme. The SEC was created to re-establish confidence of the public in the markets. Smoke & mirrors, propaganda and public relations on behalf of Wall Street. People do not really know how SEC works. It's like the mob, they come to you and say let's settle, pay us double the profits and then some penalty. Sometimes, depending on who you are, they make a big deal out of it. But when the big boys screw up, the SEC just takes a % fee and "settles". Truth is that SEC could never afford to take on a big entity like Goldman Sachs or any super wealthy investor. Nor can they afford to go after congressmen or an elite fund like SAC. Nor would they want to, it's a lot easier & more profitable to just "settle". Cross check the top officials of the SEC and you will find many upon many top ex- execs of the big boy bulge bracket firms, as well as chairmen and board members of NYSE & AMEX. Conflict of interest? Nah, not in USA. Those outside the club are doing now because there is no faith in these markets anymore. "Ambiguous" option trades prior to LBO & M&A announcements are like a regular thing now. And options are heavily analyzed by the exchanges and SEC, lot more than stock trades. So it's not like the peons at SEC are not seeing it, it's just the heads of SEC are not allowing any action on the real insider trading. They are desperately scrambling to "legitimize" this market, their quota for prosecution is up every year, so they are trying to go after anyone who is not part of the club.
And this is what people like flytiger fail to realize. It's all a well pre-planned scheme I know it all too well. As a matter of fact, I know more about the SEC than I want to. It's not pretty. There are many hard working guys there, but the system buries them. Gary Aguirre is 66 years old, and he felt he had to blow his life up to right a wrong. Pretty sick. Many years ago, when I first got mired in this, a friend who was a new attorney in a State Office explained a system to me that is very similar to the SEC. Talk to any good reporter who will level with you, and they'll tell you the same things in the previous post. Unfortunate. Let's change it, so the people that enjoy the markets, the people who respect the markets, can get it back. It's nothing now but a playground for the elite.
Now, they are investigation TXU for insider trading. If you're serious about understanding that the regulators are failing us, read this, and get his Senate testimony. You simply will not believe it. Read this, and you'll see the SEC turned a blind eye to insider trading. Now, they file two cases in a week. Think it could be the Judiciary committee? Or maybe the GAO investigation currently going on. This is huge news, and Aguirre deserves the Medal of Freedom. Whistle blowing is a dangerous thing to do. I hope you understand the seriousness of the situation. Oh, and notice this is a UK paper. Why don't our own "journalists" follow this up better? Favouritism to hedge funds could destroy investor confidence, says the former investigator fired by the SEC Andrew Clark in Washington Tuesday February 27, 2007 The Guardian He was a dogged financial detective paid to patrol Wall Street's dark alleys. But suddenly Gary Aguirre was fired by America's investment regulator - just as he was preparing to subpoena one of the world's most powerful bankers, the Morgan Stanley boss John Mack. A slim, trim, earnest figure perched on an armchair in his Washington townhouse, Aguirre is at the centre of a scandal that has enthralled the business community. To some, he is a whistleblower who fell foul of powerful political interests. To others, the former Securities and Exchange Commission investigator is a man who simply would not play by the rules. "What you have at the SEC is people rotating from jobs where you make $180,000 a year into jobs where you make over a million," Aguirre tells the Guardian in an interview, on what he sees as a mutually back-scratching relationship between the regulator and Wall Street. "It's very friendly - it's a club. I'm here, I'm inside, now I'm outside, now I'm inside again. "When the SEC starts playing favourites and they decide not to go after Wall Street elite and focus on small fry, then they're not focusing on the players that really impact the capital markets. It's not the penny stock dealers that could trigger a credit crisis in this country." Aguirre believes that hedge funds' enormous advantages pose a much greater threat to the system. America's 11,500 hedge funds, which manage $1.5 trillion (£760bn) in funds on a largely unregulated basis, are routinely playing fast and loose with the law, according to Aguirre. He compares their conduct to concerns about opaque pools of capital known as syndicates before the 1929 Wall Street crash. "When you look at the egos involved in this game and you look at the folks who are making between $200m and $1.5bn, the competition moves them to do what they need to do in order to stay on top," says Aguirre. "If you can get away with maybe crossing the line and others can see you're getting away with it, I think it's like a virus." Connections Two years ago, Aguirre was investigating a suspected case of insider dealing at Pequot Capital Management. Then the world's biggest hedge fund, Pequot had made an $18m profit in 30 days in a seemingly fortuitous series of bets on an obscure moneylending company, Heller Financial, just before a takeover bid from General Electric sent its shares soaring. Routine market monitoring pinpointed Pequot's dealing as unusual. As he investigated, Aguirre initially won praise from his supervisors for his "unmatched dedication" and "high-quality contributions" - until he sought approval to subpoena Mack, the respected banking chief nicknamed Mack the Knife for his cost-cutting prowess. Aguirre was interested in Mack because of his succession of senior roles at General Electric's adviser, Morgan Stanley. An examination of email and phone records revealed that Mack had spoken to Pequot's boss, Arthur Samberg, the evening before the hedge fund began buying Heller shares in earnest. What happened next is a matter of contention. Aguirre says that in June 2005, his supervisors warned him off Mack because the banker had "powerful political connections". The SEC vigorously denies this, insisting that Aguirre had failed to build an adequate case. Either way, Aguirre spent the next few weeks furiously protesting to his superiors. That September, he was suddenly dismissed by the SEC on the grounds that he was disruptive, disorganised and unable to accept supervision. Aguirre's complaints about his treatment sparked an inquiry on Capitol Hill. A few weeks ago, interim findings from the senate's judiciary committee concluded: "At best, the picture shows extraordinarily lax enforcement by the SEC. At worst, the picture is coloured with overtones of a possible cover-up." It would be easy to dismiss the affair as an aberration. The SEC has dropped its investigation into Pequot. Mack, who has denied wrongdoing, was never charged with anything. Aguirre is insistent, however, that his treatment is typical of a systemic pattern - a regulator that is afraid of unsettling powerful people and has failed to tackle an epidemic of misbehaviour. Although hedge funds account for a relatively modest proportion of the $90 trillion of invested capital flowing around the markets, their hyperactivity means they punch above their weight. They account for between a quarter and a half of stock market trades and commissions on all these transactions make them immensely valuable to investment banks. "They've become a cash cow for investment banks - a tremendous flow of cash. Consequently there's been an enormous amount of competition for that business," says Aguirre. "The question is, what do you give them? Do you give them first crack at analysts' reports? "How far does that information go? Growing evidence suggests that it includes tips on mergers and acquisitions." Aguirre says the SEC is even looking into whether investment banks inform hedge funds of upcoming strategies by their other clients - mutual funds - to give them a head start. A New York Times study last year suggested insider tips were rife - it found abnormal trading patterns before 41% of corporate mergers. In Britain, the Financial Services Authority says nearly a third of deals are preceded by suspicious activity. Yet, Aguirre argues, the SEC's success rate is paltry. Only about 11 cases have been brought against hedge funds, most of them for relatively minor infringements, and a small amount of money has been recovered. The SEC takes a different view. The commission's head of enforcement, Linda Thomsen, recent told Congress there had been "extraordinary successes" in prosecutions but that insider trading was extremely difficult to prove. "It is rare to find a 'smoking gun'; virtually all insider trading cases hinge on circumstantial evidence," she says. Aguirre says insider tips are merely one aspect of the favourable treatment offered to hedge funds. Last year, for example, Bear Stearns paid $250m to settle charges that it had allowed hedge funds to enter late trades - buying and selling after the market closed at 4pm, effectively using an outdated price. To invest in a hedge fund in America, you will soon need minimum means of $2.5m and even in Britain, where this stipulation does not exist, minimum investments are usually in six figures. But Aguirre says it is the little people, who have nowhere near this wealth, that lose when hedge funds get favourable treatment over other market participants. Enron and WorldCom The risk, he says, is popular disillusionment: "You're talking about investor confidence in the integrity of the whole game. Is this a fair game or are the cards stacked against me? When they begin to feel that sense, that begins to erode the primary pillar that holds the market up." A report by Van Hedge Fund Advisers predicted that hedge funds would grow to manage $6 trillion by 2015, so competition can only get keener. Aguirre says scandals such as Enron and WorldCom caused sharp dips in the market as investors lost confidence in corporate management. But doubts on a more macro level would be far more dangerous: "Do we reach a point where we have a loss of confidence in the the system itself? If so, what would be the ramifications of that?"
Can't help but think how all of this reminds me of daybreak, the series. Hopper is like Aguirre. You can watch the whole series on abc for free!
What crap! WTF believes that these schmucks are representitive of what is really going on, what has been going on for at least the past 19 years? Disposable cell phones? Oh yeah, right. The guys in Greenwich who are the real benefactors of this game are crawling out their windows in the middle of the night sending magic codes to each other. "You want the truth? You can't handle the truth." Investigators at the SEC are limited in their true desire to end those who break securities laws. It goes without saying that unless you're a blind retard, someone with only a casual familiarity with the market can see the overt patterns over and over again right before their eyes. No good luck run lasts this long. However honest and ambitious to do the right things these guys are, they're way too small in number to cover an industry this huge, they get paid birdseed and when they do get their teeth into something big they're called off because of the anticipated lost commissions or political connections. Every once and a while someone, like Boesky, gets thrown under the bus because nothing less will do. That's generally a result of the fact that other regulatory and law enforcement have made such a compelling case the SEC has no alternative but to join along. I've seen this movie before from way up close and it's pathetic.
Check this out: Wall St. Journal Actually making sense: Clearly the SEC is kicking its investigation of insider trading up a notch, but as we mentioned in an earlier post, they still donât seem to be going after the big fish. After all, a lot more than $5 million in profits was made in TXU last week. Dana Cimilluca Now look here: 10-day avg. volume leading into Feb 23 3 Million shares 30-day avg. volume leading into Feb 23 3.4 Million shares Feb. 23 Volume 6.9 Million shares Last time TXU traded more than 6.9 Million shares â Nov. 2006 TXU increased ~5% on Feb 23. Last time the stock moved up or down this much â Nov. 2006 By the numbers, TXU traded 3.4 â 3.9 million shares on Feb. 23. at an average of $58.5/share that is $175 Million to $228 Million in additional trade equity for that day. The SEC is looking at $5 Million with an unexplained $200 Million up for free grabs.10-day avg. Doesn't this effectively prove what Aguirre has said?