Insider Trading Sentence is Longest in History

   NEW YORK – 11/14/2011 - Raj Rajaratnam was sentenced Oct. 13 in Manhattan federal court to 11 years in prison stemming from his involvement in the largest hedge fund insider trading scheme in history, announced U.S. Attorney for the Southern District of New York Preet Bharara.

   Rajaratnam was the managing member of Galleon Management LLC, the general partner of Galleon Management L.P. and a portfolio manager for Galleon Technology Offshore Ltd. and certain accounts of Galleon Diversified Fund Ltd. He was convicted on May 11 of all 14 counts of conspiracy and securities fraud with which he was charged, following an eight-week jury trial. Rajaratnam was sentenced today by U.S. District Judge Richard J. Holwell. 

   It is the longest sentence imposed for insider trading in history.
   “Two years ago, Raj Rajaratnam stood at the summit of Wall Street, commanding his own financial empire. Then he was arrested, tried and convicted by a jury. Mr. Rajaratnam stood convicted 14 times over of felonies, his empire exposed as a web of fraud and corruption that entangled many,” U.S. Attorney Bharara said. “Today, Mr. Rajaratnam stood once more and faced justice which was meted out to him. It is a sad conclusion to what once seemed to be a glittering story. We can only hope that this case will be the wake-up call we said it should be when Mr. Rajaratnam was arrested. Privileged professionals do not get a free pass to pursue profit through corrupt means. The message is the same for everyone no matter who you are or how much money you have – obey the law or face the fate of those who don’t.”
   According to the superseding indictment filed in Manhattan federal court, other court documents and statements made during related court proceedings:
   From 2003 to March 2009, Rajaratnam repeatedly traded on material, nonpublic information pertaining to upcoming earnings forecasts, mergers, acquisitions and other business combinations. As the evidence at trial showed, the inside information was given as tips by insiders and others at hedge funds, public companies and investor relations firms – including Goldman Sachs, Intel, International Business Machines (IBM) Corporation, McKinsey & Company, Moody’s Investor Services Inc., Market Street Partners, Akamai Technologies Inc. and Polycom Inc. Based on the inside information, Rajaratnam executed trades in the stock of public companies, including Goldman Sachs, Clearwire, Akamai, AMD, Intel, Polycom and PeopleSupport. The court found Rajaratnam earned “well over $50 million” from his illegal trading.
   The evidence at trial included, among other things, recordings of wiretapped phone calls between Rajaratnam and his various co-conspirators, including: Anil Kumar, a former senior partner and director at McKinsey; Rajiv Goel, a former employee of Intel; Adam Smith, a former portfolio manager and analyst at Galleon; and Danielle Chiesi, a former employee of the hedge fund New Castle Partners. Rajaratnam engaged in overlapping conspiracies to commit securities fraud with these individuals, as well as with Mark Kurland, a co-founder at New Castle Partners, Robert Moffat, a former senior vice president at IBM, and Roomy Khan, who traded securities on her own behalf.
   In addition to his prison term, Rajaratnam, 54, of New York was sentenced to two years of supervised release and ordered to pay forfeiture in the amount of $53,816,434 and a $10 million fine. Rajaratnam will surrender to authorities on Nov. 28, 2011.
   During the sentencing proceeding, Judge Holwell said that insider trading “is an assault on our free markets,” and added that “the crimes and scope of the crimes (committed by Rajaratnam) reflect a virus in our business culture that needs to be eradicated.”
  Chiesi, Kurland, Moffat, Kumar, Goel, Smith and Khan have all pleaded guilty to their involvement in the insider trading schemes. Chiesi was sentenced to 30 months in prison, Kurland to 27 months in prison and Moffat to six months in prison. Kumar, Goel, Smith and Khan are awaiting sentencing.
   Bharara praised the investigative work of the FBI and thanked the U.S. Securities and Exchange Commission for its extraordinary assistance.

   The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky, and Special Assistant U.S. Attorney Andrew Michaelson are in charge of the prosecution.

   Source: Financial Fraud Enforcement Task Force

Crisis Commission Cites Culprits Behind Meltdown

1/27/2011 - Financial Crisis Inquiry Commission says crisis was avoidable, issues comprehensive, 500-plus page report. Details of the report and a copy can be obtained here: http://www.fcic.gov/

Trader Charged with Threatening to Kill Officials

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    By Steve Rensberry

   rensberrypublishing.com 

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   (RPC) - 1/18/2011 - Asset manager and commodities trader Vincent P. McCrudden of Dix Hills, NY, was charged on Jan. 14 with threatening to kill 47 U.S. officials, each of whom held various responsibilities in the regulation of the financial industry.
   Agents apprehended McCrudden at Newark Liberty Airport in Singapore. He is being represented by defense attorney Bruce Barket and is being held without bail.
   McCrudden, who had been living in Singapore, is a 20-year veteran of Wall Street and CEO of Alnbri Management, LLC, of Long Beach, New York.
   Threats were alleged to have been made via e-mail against numerous active and former officials with the U.S. Securities and Exchange Commission, the National Futures Association, The U.S. Commodities Futures Trading Commission and the Financial Industry Regulatory Authority.
   According to a summary of the case released by the U.S. Department of Justice, McCrudden, 49, faces two counts of transmitting death threats, each of which carries a maximum prison sentence of five years.
   In one instance McCrudden is alleged to have stated in an e-mail sent to an NFA employee that "it wasn't ever a question of 'if' I was going to kill you, it was just a question of when. And now, that question has been answered. You are going to die a painful death."
   McCrudden also posted threats on a website under his control, urging people to "buy a gun and take back the country," the DOJ announcement said.
   "On another page on his website, the defendant included and 'Execution List' with the names of 47 current and former officials of the SEC, FINRA, NFA, and CFTC. That list included the chairperson of the SEC, the chairman of the CFTC, a former acting chairman and commissioner of the CFTC, the chairman and CEO of FINRA, the former chief of enforcement at FINRA, and other employees of the NFA and CFTC."
   Furthermore, McCrudden upped the ante by offering a reward of $100,000 to anyone who could supply personal information about such officials and proof of their punishment.
  The complain alleges that McCrudden began his threats not long after the CFTC filed a civil enforcement suit in early December, 2010, the latest in a string of disciplinary actions by regulatory agencies over many years.
   Business Insider has reported on a number of McCrudden's alleged threats here, in particular those made against Dan Driscoll of the National Futures Association.
   The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Lanny A. Breuer, Assistant Attorney General of the Criminal Division, United States Department of Justice; and Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
    Lynch stressed the importance of the government's case.
   "In this day and age, there is no such thing as an idle threat. Those who threaten injury or worse to the lives of others will be promptly investigated and vigorously prosecuted," Lynch said.
   The website of Alnbri Management, LLC says that McCrudden has two children and is a former soccer player with the University of Rhode Island and at one time played professionally for the Tampa Bay Rowdies and the Minnesota Strikers, in addition to being an amateur boxer and having raised money for slain and disabled officers with the New York Police Department.
   But the site also contains this statement:
   "Mr. McCrudden has spent the past 13 years and counting combating a colluded Government attempt to discredit and harass Mr. McCrudden through repeated bogus procedures. Mr. McCrudden has sought relief by suing multiple agencies and officials for $1 Billion. But this has not stopped certain higher ranking officials because they know that Judges are Government employees too. In order to stop the libel, slander and harrassment at the hands of these entities, and with no available forum in the US justice system, Mr. McCrudden has started a process to enact payback for years of Government abuse." See: Alnbri Management.
   According to the site, McCrudden claims to be a two-time survivor of the World Trade Center bombings and to have lost 23 friends in the tragedy.
   "Wake up my fellow citizens and middle class and go look into the mirror, because you my friends are the face of the new Al Qaeda! Civil disobedience can be a start for justice. Its us (middle class) against them (Government officials and the Bourgeosie). Start acting now before its too late!" the site says.

Hariri Sentenced in Historic Hedge Fund Case

Former Executive Gets 18 Months, Fine for Role in Trading Scam

   NEW YORK – 11/9/10 - Ali Hariri, a former executive at Atheros Communications Inc., was sentenced on Nov. 8 in Manhattan federal court to 18 months in prison for his participation in the largest hedge fund insider trading case in history, U.S. Attorney for the Southern District of New York Preet Bharara announced this week. 
   U.S. District Judge Richard J. Holwell, who imposed the sentence, also imposed a two year term of supervised release and a $50,000 fine.
   According to documents previously filed in Manhattan federal court and statements made during Hariri’s guilty plea proceeding, from 2008 to March 2009, Hariri, a vice president at Atheros, engaged in an insider trading scheme in which he obtained material, nonpublic information relating to Atheros.
   Hariri provided this inside information to Ali Far, a hedge fund manager, for the purpose of executing profitable securities transactions Hariri knew that the information he provided to Far was material and non-public, and he disclosed it in breach of fiduciary and other duties of trust and confidence that he owed to Atheros.  In exchange for inside information regarding Atheros, Far provided Hariri with tips to buy and sell the stocks of other technology companies. 
   “Ali Hariri’s sentencing provides another reminder of how pervasive insider trading has become and the lengths to which corrupt insiders will go to misuse confidential information for their own personal gain,” Bharara said. “It should also remind those who might contemplate similar crimes that we will ultimately find you, prosecute you and convict you.  This office is committed to stopping insider trading in its tracks to protect the integrity of our markets.”
   On March 3, 2010, Hariri, 39, of San Francisco, pleaded guilty to conspiring to commit insider trading crimes Hariri also pleaded guilty to substantive securities fraud. Far has also separately pled guilty to conspiring to commit insider trading crimes and to substantive securities fraud. He is awaiting sentencing.   
Bharara praised the investigative work of the FBI.  He also thanked the U.S. Securities and Exchange Commission. Bharara said the investigation is continuing.
    The case is being handled by the office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jonathan Streeter and Reed Brodsky and Special Assistant U.S. Attorney Andrew Michaelson are in charge of the prosecution.
   Source: Financial Fraud Enforcement Task Force .

Economy Trumps Social Issues, Foreign Policy

Candidates Avoid Debates Over Civil Rights, Middle East Conflict
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                       By Mike Cyr
                   Business/Economy
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   (RPC) - 11/6/10 - As expected, the recent midterm election has elevated the spirits of the populist, relatively-out-of-power political right. The question is, for how long?
   Despite their gains, it's a near certainly that those who consider themselves left wing, centrist or otherwise different from the right will soon find their own spirits becoming energized in near equal proportion, as has been the case throughout history.
   One of many oddities of the Nov. 2 election was noted in a Nov. 5 article by Michael Cooper of the New York Times. That is, even though voters turned over a large number of seats to Republicans they did so with a striking degree of trepidation. If it was a vote for the "lesser of two evils," is was only by the very slightest degree. Exit polls, Cooper points out, showed 53 percent of voters disapproving of the Democrats and 52 percent disapproving of the Republicans. Apparently some weren't afraid to parcel out blame to both in equal measure.
   As pertains to blame, Cooper notes poll results which show voters blaming Wall Street (35 percent), President George W. Bush (29 percent), and President Barack Obama (23 percent). See Debunking the Myths of the Midterm.
   Rather than presenting either major party with a  mandate, the results suggest a public that is profoundly confused, incredible impatient and nearly schizophrenic in some respects. Maybe the economy was beginning to turn around. Maybe not. Either way, today's elected officials--of whatever ideological persuasion--are being asked to govern in an almost lose-lose situation.
   Two addition observations: There was a near total lack of debate in this past election over social issues such as abortion and gay rights, and over foreign policy--issues that are certain to hold sway over the election of 2012. Baring an economic miracle, time may be the only remedy to escape the vicious "get in, get all you can, then get out" political pattern that appears to rule the day.