Jefferies Latest Casualty In Insider Trading Ring
As more and more tentacles of the insider trading octopus get exposed, thanks to an SEC seeking to make up for decades if not centuries of miserable inactivity, many more firms are sure to feel the wrath of the Feds. The latest one is Jefferies, whose former money manager for its Paragon Fund Joseph Contorinis is the most recent person snagged in the insider trader scandal, after he was indicted earlier by a grand jury for orchestrating a $7.2 million insider trading ring.
The indictment by the Manhattan grand jury follows
Contorinis’s February arrest. Another person charged with him,
Nicos Stephanou, who was an associate director of mergers and
acquisitions at UBS’s London office, pleaded guilty in May to
charges that he passed information about bids for Albertson’s
Inc., ElkCorp and National Health Investors Inc.
Charges against a third defendant, Ramesh Chakrapani, a
managing director of Blackstone Group LP’s takeover advisory
unit, was dismissed in April, according to court records.
Yet investment banks are likely not to suffer too severly as the SEC is happy to just let them off with a mere warning and a monetary penalty. Of course, for hedge funds it is a different story. And that's where the ongoing investigation seems to be focusing: now that many of the peripheral firms have been implicated, the question is how far with their squeals of cooperation lead prosecutors. According to speculation, several $10 billion+ funds are currently in the regulators' cross hairs. It will be very interesting to see how Goldman will be trading with just other banks when all of its core PD clients end up shutting down. Then again all a PM needs is a wifi connection and a Bloomberg terminal to feed the monkey: look for free wifi development opportunities for all minimum security prisons in the next Stimulus bill.