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Insider Trading: FBI Tapping into a Goldmine
July 15, 2011
FBI wiretaps have brought down some of the most "successful" hedge fund managers and their co-conspirators - most notably, Galleon's Raj Rajaratnam. So, when the going is good, the good keeps going.
According to Business Insider's Katya Wachtel, the FBI now has no fewer than 97 phone lines on wiretap. Referring to a Financial Times story, Ms. Wachtel reports that "if you had a working relationship with expert network firm Primary Global Research (PGR), chances are, the FBI has a tape with your voice on it, in storage." Obviously if they did nothing wrong, they'll be fine.
The FBI Sting. "U.S. prosecutors intercepted phone calls involving nearly 100 investment fund clients of PGR in 2009 as part of an insider trading investigation," the FT reports. A judge allowed the FBI to "intercept calls involving two telephone lines used by Primary Global in October 2009," as well as the "unique personal identification numbers associated with 97 clients, including hedge funds and mutual funds."
Ms. Wachtel notes that, while the number seems high, there were previous indications that the government insider trading investigation was extraordinarily sweeping - multiple hedge funds were subpoenaed and raided last year, and the Department of Justice said at least 50 companies had received summonses in connection with the probe.
Not Every Target is Alleged to Have Cheated. "The government identified 15 of those as targets of its investigation in 2009," the FT reported. "It was not clear if the 97 money managers were told their conversations were recorded." So in fact, all those hedge fund managers that were having their offices and homes swept for listening devices, weren't paranoid at all... They were kind of right.
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