The Galleon Insider Trading Net Expands, Will SAC Be Caught Next?

Tyler Durden's picture

With over 30 people arrested or cooperating with the US Attorney General in the biggest insider trading bust in history, one can be sure that as many of those wishing to avoid jail time sing, many more arrests will undoubtedly come. Will this investigation impact "information arbitrage" specialist SAC (as Zero Hedge has speculated)? As of now the firm has gone through unscathed, although the net may be closing in on the 72 Cummings Point Road behemoth. After all, why would the SEC attempt to place its informant back with Steve Cohen's $12 billion hedge fund unless they had prior reason to be suspicious, and unless Richard Lee had advised them of improprieties handled by the man who trades 10% of the NYSE's (declining) volume daily. An arrest implicating billionaire Steve Cohen would likely make (or destroy) the political career of whoever the attorney prosecuting him. Which is why any evidence better be ironclad.

The widening investigation of insider trading on Wall Street is
expected to examine transactions at Steven A. Cohen's SAC Capital
Advisors, one of America's largest and most successful hedge funds,
according to people familiar with the matter.

A plea agreement between the government and a cooperating witness in
the investigation, Richard Choo Beng Lee, indicates that Mr. Lee has
agreed to provide information to prosecutors about a hedge fund where
he worked between 1999 and 2004. That firm is SAC, according to people
familiar with the matter.

In March 2009, after striking the deal to assist the government, Mr.
Lee sought to get rehired by Mr. Cohen, people familiar with the matter
say.
Mr. Cohen declined to hire Mr. Lee because he was suspicious about
the recent and abrupt closure of Mr. Lee's hedge fund, Spherix, these
people say.

A nice map of the various relationships as the emerge is provided by the WSJ:

In the meantime, it may not be a bad idea to keep an eye out for any and all totally unnecessary and very much obtrusive pool cleaning vehicles belonging to Acme Corp. (full not of chlorine powder but ultrasonic sound interception devices) in front of 30 Crown Lane, Greenwich.