Insider-trading charges are being prepared against a vast network of consultants and traders across the US financial industry in a years-long probe that a report suggests will reveal a pervasive culture of backroom dealing.
The investigation could be the largest insider-trading probe in US history, The Wall Street Journal said Saturday citing people close to the issue, with federal officials examining if multiple, organized insider-trading rings reaped illegal profits of tens of millions of dollars.
Some charges could be brought before the end of the year, the Journal said.
The criminal probe is examining some three dozen companies in the probe, which is examining the "expert networks" to clients such as hedge funds and mutual funds, which connected managers of companies with investors in a bid to offer inside tracks on financial deals, according to the report.
And behind these consulting firms and the culture of insider trading that led to Big Casino are the biggest names on Wall Street, including the guys at the top of the pyramid.
Among those being investigated, the newspaper said prosecutors were examining whether bankers with the Goldman Sachs Group leaked information about transactions, including health-care mergers, in a bid to benefit investors.
Inside traders are generally known to profit after being tipped off on deals ahead of time -- for example, giving them an opportunity to buy stocks before acquisitions, and then selling them after the shares rise in value.
As well as large financial firms like Goldman Sachs, the investigation is also examining independent analysts and research houses for providing non-public information to hedge funds. The report suggest the three-year probe has involved wiretapping the telephone conversations between consultants and investors.
A culture of people who clearly believed the amount of money involved made them invincible to prosecution have just discovered how wrong they were. And to all the folks that said Obama was a tool of the banksters, do you think President McCain would have lifted a finger to even look at these guys? The probe in 2007 would have been killed in January 2008, guaranteed.
This is potentially huge. Much more on this from Tyler Durden and the Zero Hedge crew.
Over a year ago, Zero Hedge published an expose in three parts (two of them in the form of direct letters to Andrew Cuomo) discussing the possibility that so-called "expert networks" are nothing less than legalized insider trading rings for the uber-wealthy, operating largely unsupervised, and leaking selective information to preferred clients. For those who may be new to this topic, we suggest catching up on Part 1, Part 2 and Part 3. Subsequently, we also suggested that expert networks would be implicated in the bust of Galleon Partners, the Goldman "Huddle", the collapse of FrontPoint Partners and, most recently, that expert networks may have been directly or indirectly involved in facilitating the record historical P&L of such hedge fund "titans" as SAC Capital. Today, via the Wall Street Journal, we realize that not only have the good folks at the SEC been diligently reading us for the past 13 months, but that we may have been right all along (once again).
If you thought the banks were in trouble before, the real show is about to begin.
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2 comments:
If you thought the banks were in trouble before
Well, I didn't. But I hope they are now.
I wonder if this is the moment when Beck and Pslin and Bachmann and the rest of the nut squad just say flat out that "bankers are your friends, teabaggers, and the Marxist in the White House is your enemy." They've been straddling the line on this issue so far, but now...?
Between this and foreclosuregate, the banks are in deep, deep crap. Potentially.
Of course, Congress is in a position to make all of this go away.
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