I had a high school friend with a relative who was a reasonably-successful hedge fund manager ($500M AUM in the early 2000s) - nothing crazy, no insane quants,

I had a high school friend with a relative who was a reasonably-successful hedge fund manager ($500M AUM in the early 2000s) - nothing crazy, no insane quants, just a pretty traditional (for the time) fund, and in moments of candor (usually assisted by THC), the relative basically said the exact same thing: Most of the alpha in the traditional hedge fund world often just boiled down to getting away with insider trading. It was so rampant that it was just part of the game. The stuff we all heard about in the news was just the particularly egregious stuff the SEC HAD to blow up. But if the SEC prosecuted every instance of anything even remotely insider-y, there would have been no hedge funds left. (Now to be fair: I'm not really speaking to Renaissance - just to the general industy in the early 2000s. I think other commenters have made compelling points that Renaissance may very well have some actual special sauce.)