Later On

A blog written for those whose interests more or less match mine.

Could it be that we SHOULDN’T simply trust businesses?

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Walter Hamilton writes in the LA Times:

As an eavesdropping-detection specialist, Kevin D. Murray normally works for companies concerned about possible spying by competitors.

But since a blockbuster insider-trading prosecution built on wiretaps and microphone-wearing informants became public last month, frantic hedge fund managers have raced to hire him.

"The nature of the question is ‘Can you tell me if the government’s bugging me?’ " Murray said, adding that he turned down the three firms that approached him.

Two years ago, hedge fund managers were acclaimed as financial whizzes, envied and even grudgingly respected for raking in gobs of money with daredevil investment strategies.

Now the hedge fund industry, facing public scorn in the wake of the financial crisis and still reeling from steep investment losses last year, is at the center of the biggest insider-trading scandal in a generation, pitted against prosecutors who are moving aggressively to stamp out what they fear is widespread abuse of confidential information on Wall Street.

The scandal expanded Thursday as federal prosecutors filed criminal charges against 14 people, bringing the number charged in the continuing probe to 20.

The criminal complaint and a companion civil lawsuit filed Thursday depict an insider-trading network brazenly swapping information about planned corporate mergers and taking such elaborate steps to avoid detection that authorities likened the methods to those used by narcotics traffickers. To build their case, authorities used informants, wiretaps and a stakeout on a Manhattan street corner, the court filings show.

A key figure in the charges is Zvi Goffer, a former employee of New York hedge fund firm Galleon Group. Other defendants allegedly referred to him as "Octopussy" — a reference to a 1983 James Bond film — because, according to the complaints, he got confidential information from numerous sources.

Goffer used disposable cellphones to hide his actions and after finishing with one of them, broke it in half, bit its memory card, threw away half of the phone and instructed another defendant to dispose of the other half elsewhere, the complaints allege.

"If you find yourself chewing the memory card in your cellphone to destroy any record of your misconduct, something has gone terribly wrong with your character," Securities and Exchange Commission enforcement chief Robert Khuzami said at a news conference…

Continue reading.

Written by Leisureguy

6 November 2009 at 12:36 pm

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