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The US Attorney's press release may be found here, the charging document here, and the remarks of Preet Bharara, the United State's Attorney for the Southern District of New York, can be found here.
Thursday round-up
2 hours ago
Saturday, October 17, 2009
Billionaire, Founder of Galleon Group, Charged With Insider Trading
The US Attorney's press release may be found here, the charging document here, and the remarks of Preet Bharara, the United State's Attorney for the Southern District of New York, can be found here.
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6 comments:
Nice blog, Mr. Campbell. Nice job all around. I like the legal news roundup and the focus of your work. You're on my reading list.
Ms. N
Thanks for the feedback, I'm glad you enjoy the content. Feel free to comment in the future too!
I believe there are other bigger sly fishes who not yet been caught but are equally doing gigantic damage to the US and world economy!
I wholeheartedly agree that there are other big fish out there, and at this point it is difficult to tell the extent of Rajaratnam's fraud, because this initial set of charges seems relatively small compared to the size of his fund and his net worth.
On a side note, it should be noted that insider trading is a very new crime, and there is a body of scholarly writing that argues it is beneficial to the efficiency of the market and valuation of companies. One of the more famous proponents of this view is Henry Manne, one of the founders of the Law and Economics area of study. Here is a link with an explanation of his position:
http://www.sjsu.edu/faculty/watkins/manne.htm
And Manne isn't the only one, Milton Friedman, Chief Judge Frank Easterbrook, Daniel Fischel, and Thomas Sowell all subscribe to similar views.
Evidently, there are dangers to allowing insider trading. One commonly noted is a general concept of fairness, that this position of power allows executives to benefit from information disproportionate to their actual performance. Another argument for regulation is market confidence. Smaller market players would certainly be less likely to enter the market if they believed that hidden knowledge may hurt their investment.
In any event, yes, there certainly are other big fish out there that need frying, but at least the authorities are trying to keep a handle on things. Hopefully the more that are caught and punished, the more that will be deterred from perpetrating similar acts.
Since we're all talking now (and I am the Ms. N from above, not the second anonymous,) let me just say that insider trading is a given and it does contribute to an efficient market. That's why technical analysis is important. Practically speaking, insider trading may or may not even affect the stock price.
However, what is more important is where insider trading is going and how it might be accomplished without detection, and the problems this will present to any authorities who might hope to keep up with this activity.
Check out HP's presentation at the Dark Hat Vegas get-together this summer and tell me whether you think insider trading now needs a phone call, email or face-to-face to happen, or whether you even need to know with whom you are trading information:
http://discuss.itwire.com/viewtopic.php?f=18&t=14653
Then tell me how you see it all unfolding.
Cordially yours,
Ms. N
Great read Ms. N, I thoroughly enjoyed it. I was aware of these, and I am aware of the growing push for anonymous communication on the internet, but I wonder where it is all headed. After all we have a whole social movement (or posse of cyber vigilantes/thugs/criminals/hackers, whichever you choose to label them as) that calls themselves Anonymous. Heck, you can even post anonymously on my blog!
I would be interested in the actual technical mechanism that HP's darknet uses to prevent leaving forensic evidence (logged IP's, history, server cache...etc). It sounds like no central server hosts the net, but is shared across multiple computers similar to some of the file-sharing protocols. But it seems this will still allow individual computers to see IP addresses of other participants (otherwise, how would they communicate with one another), unless they used a proxy bounce, but that would simply make the trail of evidence a bit longer.
In any event, increases in technology have historically often made crimes easier to track, not more difficult as is the case here. However, the Founding Fathers of the United States believed that a free press was a necessary basis for a functional democracy. A technology like this seems to be the ultimate extension of a free press, with no accountability for information that is disseminated. This presents a whole new set of problems, though, as is already the case on the internet, verification of information is more difficult with no accountability. Just head on over to one of the "Anon" hangouts (ie. /b/), the anonymous image posting boards, and you can get a taste of just how chaotic anonymous communication can be.
But yes, intelligent criminals will certainly take advantage of technologies that facilitate the commission of crimes without leaving forensic evidence. Some lawmakers will brand the technologies as threats to national security (as well they may sometimes be), and will try to ban them. At such a point, a delicate balance between individual liberties, free speech, and the health of democratic nations will be weighed against the security interests of governments everywhere (and hopefully not here, but also the ability to control information and the press). To put it another way, I doubt Iran or China would be to keen on a technology like this.
Thanks for the continued contributions Ms. N, lets keep this alive.
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