7 ms·

A Dirty Business: New York City’s top prosecutor takes on Wall Street crime

95 points by yoseph 15y ago

tzury 15y ago
single page link instead of 12 parts. http://www.newyorker.com/reporting/2011/06/27/110627fa_fact_packer?currentPage=all http://www.newyorker.com/reporting/2011/06/27/110627fa_fact_...
cannikin 15y ago
tl;dr?
- sudonim 15y ago
  Tl;dr: The article documents "the largest insider-trading case in history" where a hedge fund set up kick backs to individuals who provided the hedge fund insider trading tips.
  - rkalla 15y ago
    tl;dr v2: inside look at how Wall Street functions - these just happens to be people that got caught.
    - paulirish 15y ago
      luckily they did get caught. 11 pages in I was praying to FSM that they didn't get acquitted.
      - deleted 15y ago
        [deleted]
        shii 15y ago
        Right, the evil evil wall street bogeyman.
    - mdda 15y ago
      I work on Wall Street. People in my office genuinely want these guys locked up : They're bad for everyone.
  - deleted 15y ago
    [deleted]
known 15y ago
If you meet anybody from India, ask him 'What Is Your Caste?'
oliveoil 15y ago
One day, mathematicians will prove that any fund doing better enough than the index must be insider trading. All those people from the 90s and 2000s, long retired by then, will be convicted. It's like in cycling when they measure too much hemoglobin in the blood they conclude the guy's doping. The funds' financial records will be their frozen piss samples.
- sorbus 15y ago
  Or very lucky. Or good at spotting trends. Or going out of their way to notice patterns indicative of insider trading on the part of other funds. Insider trading is not the only way to do better than the index.
  - xtreegold 15y ago
    Depends on the timeframe. If you consistently get lucky, you most likely weren't.
  - oliveoil 15y ago
    But I said 'better enough'. There are of course investors that can legally get above the index.
- nekitamo 15y ago
  Or those same mathematicians could simply beat the market and become filthy rich. Oh wait, they already have: http://en.wikipedia.org/wiki/Renaissance_Technologies http://en.wikipedia.org/wiki/Renaissance_Technologies
  - NY_USA_Hacker 15y ago
    Oh, oh, oh, how you exaggerate! Maybe he paid himself $2 billion one year, but, gee, that's little enough for the Chern-Simons result, right! I don't know what Simons does, but he sure did it!
- daniel-cussen 15y ago
  >The funds' financial records will be their frozen piss samples. A little surprised you were downvoted. Here's a "frase para el bronze" (phrase that will be set in bronze, repeated possibly forever).
mixon 15y ago
Frankly, I did not like this sentence in the article: "In an earlier generation of immigrant financiers, Kumar would have been the German Jew, Rajaratnam the Russian." P.S. I am Russian
known 15y ago
Rajaratnam could have roped in a Congress member. Insider trading is legal to Congress http://www.cnbc.com/id/43471561 http://www.cnbc.com/id/43471561
temphn 15y ago
The article lionizes prosecutors and demonizes Wall Street, even to the point of quoting Eliot Spitzer on honesty. It also goes on and on about the ethnicity of the accused in this case without ever mentioning the ethnicity of many of the players in the mortgage crisis. Finally, it puts the entirety of the blame for the crisis on Wall Street and cites Dodd Frank as good legislation...and puts zero blame on the shoulders of Barney Frank, the CRA, and the Bush/Clinton/Obama push for "affordable" minority housing. George Packer has an agenda, and that agenda is not truth.
- dr_ 15y ago
  You are correct that it lionizes prosecutors and demonizes Wall Street. The article keeps shifting focus way too much - first it's about Galleon, then about Preet, then the financial crisis, and it ends with a comment about Goldman Sachs, with some implied cynicism on the part of the author. I'm not sure if the blame should be put on Clinton/Bush for pushing affordable housing however. At the end of the day, no one forced people to purchase a home beyond their means, just like no one forced people to purchase stocks during the late 90's tech bubble. It's a decision people made on their own.
  - shareme 15y ago
    incorrect..sir.. When the regulatory bodies allow a no-doc loan for a house to be entered into by the consumer they are in-fact complicit in fraud.. Uniform Commercial Code already implies that such a loan as a contract is extremely leaning towards fraud. The biggest entities involved Bank lobbyists encouraging others to look the other way rather than enforce laws and rules laready on the books
    - mdda 15y ago
      This makes no sense. A no-doc loan is precisely that. If an applicant chooses to lie, the government is not responsible. If your claim is that the applicants are being encouraged to commit fraud (by their local mortgage broker), then the government should start with regulating mortgage brokers. That's where the rot started. While it's natural for politicians to point fingers at their opponents, or the Wall Street bogeymen, the reality is that neither party caused the massive run-up in housing prices, and nor did Goldman Sachs.
mkramlich 15y ago
I bet this kind of thing is happening ALL the time on Wall Street. This is just one particular case, one particular set of guys that got caught. I also believe that one unofficial purpose of the existence of many CxO roles (at large companies) and more especially Board seats, advisor roles, "strategic consultants", and both banking and legal advice is to help make this kind of insider info and quasi-legal information flow around to parasitic folks so they can make profitable bets on it. Especially the modern de facto aristocracy that exists. There are just way too many people, pursuing their own self-interest, trying to maximize the money they make, with too many easy ways for folks to communicate or collude without a damning document trail, for this not to be the case. It's human nature. Particularly the kind attracted to the Wall Street kind of lifestyle and career. The situation is complicated by the fact that the line is sometimes blurry between a case where you can make an ethical bet versus an unethical one. A legal bet versus an illegal one. Even supposedly ethical/legal investment is a form of betting. I'll also go on record as saying I think the true purpose of some IPO's is to serve as a veiled excuse to induce an event that will enable people within that parasitic class to earn bucks from insider info bets. Not truly, and especially not solely, to raise investment money from the public. For any pedants who may come back with criticisms: note my use of qualifiers like the word "some". I don't think it happens all the time, in all cases, and I don't think everyone involved in Wall Street or on a corporate board or at a consulting firm is necessarily unethical or doing these kinds of activities. But I've seen tons of evidence over the years that suggests that it is both common and by design. To sum up my take overall: Entrepreneurship and business good. Parasitic financial shenanigans and aristocracy bad.
known 15y ago
With HFT you can do Insider Trading.

95 points by yoseph 15y ago

tzury 15y ago

single page link instead of 12 parts. http://www.newyorker.com/reporting/2011/06/27/110627fa_fact_packer?currentPage=all http://www.newyorker.com/reporting/2011/06/27/110627fa_fact_...

cannikin 15y ago

tl;dr?

sudonim 15y ago
Tl;dr: The article documents "the largest insider-trading case in history" where a hedge fund set up kick backs to individuals who provided the hedge fund insider trading tips.
- rkalla 15y ago
  tl;dr v2: inside look at how Wall Street functions - these just happens to be people that got caught.
  - paulirish 15y ago
    luckily they did get caught. 11 pages in I was praying to FSM that they didn't get acquitted.
    - deleted 15y ago
      [deleted]
      - shii 15y ago
        Right, the evil evil wall street bogeyman.
  - mdda 15y ago
    I work on Wall Street. People in my office genuinely want these guys locked up : They're bad for everyone.
- deleted 15y ago
  [deleted]

known 15y ago

If you meet anybody from India, ask him 'What Is Your Caste?'

oliveoil 15y ago

One day, mathematicians will prove that any fund doing better enough than the index must be insider trading. All those people from the 90s and 2000s, long retired by then, will be convicted. It's like in cycling when they measure too much hemoglobin in the blood they conclude the guy's doping. The funds' financial records will be their frozen piss samples.

sorbus 15y ago
Or very lucky. Or good at spotting trends. Or going out of their way to notice patterns indicative of insider trading on the part of other funds. Insider trading is not the only way to do better than the index.
- xtreegold 15y ago
  Depends on the timeframe. If you consistently get lucky, you most likely weren't.
- oliveoil 15y ago
  But I said 'better enough'. There are of course investors that can legally get above the index.
nekitamo 15y ago
Or those same mathematicians could simply beat the market and become filthy rich. Oh wait, they already have: http://en.wikipedia.org/wiki/Renaissance_Technologies http://en.wikipedia.org/wiki/Renaissance_Technologies
- NY_USA_Hacker 15y ago
  Oh, oh, oh, how you exaggerate! Maybe he paid himself $2 billion one year, but, gee, that's little enough for the Chern-Simons result, right! I don't know what Simons does, but he sure did it!
daniel-cussen 15y ago
>The funds' financial records will be their frozen piss samples. A little surprised you were downvoted. Here's a "frase para el bronze" (phrase that will be set in bronze, repeated possibly forever).

mixon 15y ago

Frankly, I did not like this sentence in the article: "In an earlier generation of immigrant financiers, Kumar would have been the German Jew, Rajaratnam the Russian." P.S. I am Russian

known 15y ago

Rajaratnam could have roped in a Congress member. Insider trading is legal to Congress http://www.cnbc.com/id/43471561 http://www.cnbc.com/id/43471561

temphn 15y ago

The article lionizes prosecutors and demonizes Wall Street, even to the point of quoting Eliot Spitzer on honesty. It also goes on and on about the ethnicity of the accused in this case without ever mentioning the ethnicity of many of the players in the mortgage crisis. Finally, it puts the entirety of the blame for the crisis on Wall Street and cites Dodd Frank as good legislation...and puts zero blame on the shoulders of Barney Frank, the CRA, and the Bush/Clinton/Obama push for "affordable" minority housing. George Packer has an agenda, and that agenda is not truth.

dr_ 15y ago
You are correct that it lionizes prosecutors and demonizes Wall Street. The article keeps shifting focus way too much - first it's about Galleon, then about Preet, then the financial crisis, and it ends with a comment about Goldman Sachs, with some implied cynicism on the part of the author. I'm not sure if the blame should be put on Clinton/Bush for pushing affordable housing however. At the end of the day, no one forced people to purchase a home beyond their means, just like no one forced people to purchase stocks during the late 90's tech bubble. It's a decision people made on their own.
- shareme 15y ago
  incorrect..sir.. When the regulatory bodies allow a no-doc loan for a house to be entered into by the consumer they are in-fact complicit in fraud.. Uniform Commercial Code already implies that such a loan as a contract is extremely leaning towards fraud. The biggest entities involved Bank lobbyists encouraging others to look the other way rather than enforce laws and rules laready on the books
  - mdda 15y ago
    This makes no sense. A no-doc loan is precisely that. If an applicant chooses to lie, the government is not responsible. If your claim is that the applicants are being encouraged to commit fraud (by their local mortgage broker), then the government should start with regulating mortgage brokers. That's where the rot started. While it's natural for politicians to point fingers at their opponents, or the Wall Street bogeymen, the reality is that neither party caused the massive run-up in housing prices, and nor did Goldman Sachs.

mkramlich 15y ago

I bet this kind of thing is happening ALL the time on Wall Street. This is just one particular case, one particular set of guys that got caught. I also believe that one unofficial purpose of the existence of many CxO roles (at large companies) and more especially Board seats, advisor roles, "strategic consultants", and both banking and legal advice is to help make this kind of insider info and quasi-legal information flow around to parasitic folks so they can make profitable bets on it. Especially the modern de facto aristocracy that exists. There are just way too many people, pursuing their own self-interest, trying to maximize the money they make, with too many easy ways for folks to communicate or collude without a damning document trail, for this not to be the case. It's human nature. Particularly the kind attracted to the Wall Street kind of lifestyle and career. The situation is complicated by the fact that the line is sometimes blurry between a case where you can make an ethical bet versus an unethical one. A legal bet versus an illegal one. Even supposedly ethical/legal investment is a form of betting. I'll also go on record as saying I think the true purpose of some IPO's is to serve as a veiled excuse to induce an event that will enable people within that parasitic class to earn bucks from insider info bets. Not truly, and especially not solely, to raise investment money from the public. For any pedants who may come back with criticisms: note my use of qualifiers like the word "some". I don't think it happens all the time, in all cases, and I don't think everyone involved in Wall Street or on a corporate board or at a consulting firm is necessarily unethical or doing these kinds of activities. But I've seen tons of evidence over the years that suggests that it is both common and by design. To sum up my take overall: Entrepreneurship and business good. Parasitic financial shenanigans and aristocracy bad.

known 15y ago

With HFT you can do Insider Trading.