Rajaratnam Convicted of Fraud

[Tradewinds 12]

The ex-hedge fund manager Rajaratnam was convicted of fraud. There were 14 counts against him. Basically he was getting information that was not public.

 

This situation illustrates a big problem with the investment industry. In order to get a conviction, there needed to be wire taps. I wonder it there would have been a conviction without the recordings of his private conversations.

 

It also highlights the difference between the big players and the small players.

[ahimsa 10]

The ex-hedge fund manager Rajaratnam was convicted of fraud. There were 14 counts against him. Basically he was getting information that was not public.

 

This situation illustrates a big problem with the investment industry. In order to get a conviction, there needed to be wire taps. I wonder it there would have been a conviction without the recordings of his private conversations.

 

It also highlights the difference between the big players and the small players.

 

hi tradewinds,he was convicted basically for insider trading? i don't understand what do you mean for difference for big and little,players,not ever the recordings of private conversations are sufficient for conviction anyone ,maybe because these can be modified.

[Tradewinds 12]

hi tradewinds,he was convicted basically for insider trading?

 

Yes, it was for insider trading. He is a billionaire, and I'm sure has connections that the average person does not have.

[ahimsa 10]

Yes, it was for insider trading. He is a billionaire, and I'm sure has connections that the average person does not have.

 

do you think that after the conviction he'll have to pay for it?for this big player like you called him,maybe its more easy to prove that the count of indictement was made on false paper,and being automatically judge innocent.because,once a time proved the falsity all the things that come in the other side become believable. ( i just throw my opinion)

[Tradewinds 12]

do you think that after the conviction he'll have to pay for it?

 

Well, if he gets a long prison sentence, that will inflict some discomfort on him. He may still be rich when he gets out of prison, I don't know.

 

Unless basic human nature somehow changes, or the human race gets better at valuing good behavior, then enforcement and punishment will remain the deterrent method.

[SIUYA 11]

take a set of rules - put 1000 people in the room, odds are a small selection of people will break those rules for their own advantage.

Change the rules, or change the people, my guess is the same will happen.

I hate to say it but maybe his best trade would be to cut his losses and disappear to another country if he could.

[Tradewinds 12]

take a set of rules - put 1000 people in the room, odds are a small selection of people will break those rules for their own advantage.

Change the rules, or change the people, my guess is the same will happen.

I hate to say it but maybe his best trade would be to cut his losses and disappear to another country if he could.

 

He is free on bail, at least until the sentencing. I'm not sure how that works. It will be interesting if this case makes any real difference in clarifying or defining the rules about what insider trading is and isn't. I don't know anything about what constitutes insider trading, except for the obvious.

 

I have sometimes heard of long term investors visiting a company, and getting to know the management before investing in a company. So I assume something like that is legal under some circumstances. Maybe the problem comes with shorter term trades.

[BlowFish 10]

I thought it was common knowledge that one uses disposable mobiles for illegal activity? The guy obviously does not have enough time for TV/reading!

[SIUYA 11]

I thought it was common knowledge that one uses disposable mobiles for illegal activity? The guy obviously does not have enough time for TV/reading!

 

or maybe he had been doing it for so long he thought he could get away with it......hasn't he heard the old "I'll call you on my mobile as these phones are taped"

 

tradewinds----

when it comes to insider trading, the general rule is anything that could have a material effect on the the share price that is not publicly known that you then buy or sell shares in that stock. (Even if you are just exiting a position that you were long).

(underlines for the key words)

 

In other words once you have knowledge of something that could be seen to move the price, and you act on it, you could be considered an insider.....so it should really be up to you and or your broker/CEO/analyst to be aware of this, and often you can ask NOT to be told of certain information, unless this information is being made freely available to anyone.

This is why is hard to proove it, yet also easy to imply it.

(I know of someone charged with insider trading when they bought shares throughout the day, then sold some of their shares on the close to reduce their position, as they were questioned by their bosses about the size of their position. They thought they were questioning that the position was too large, when in fact it seemed that the bosses knew (suspected) a takeover was coming. Sure enough the takeover came. Nothing came of it, but the mere suspicion and actions at the wrong time can raise alarm bells)

You can insider trade and loose money and still be convicted

 

Different rules for different countries of course.

Edited May 16, 2011 by SIUYA

[ahimsa 10]

I thought it was common knowledge that one uses disposable mobiles for illegal activity? The guy obviously does not have enough time for TV/reading!

 

 

The guy obviously does not have enough time for TV/reading!

 

Don't have a time for TV could be a good quality,:)that move in his advantage.

[Mysticforex 13]

More fallout from the Rajaratnam conviction:

 

Ex-Ropes & Gray associate disbarred after Rajaratnam insider trading verdict- Legalweek

[BlowFish 10]

The guy obviously does not have enough time for TV/reading!

 

Don't have a time for TV could be a good quality,:)that move in his advantage.

 

My point was if he did he would have known to use a disposable phone! (and so probably not been busted) Guess he'll get plenty of time to catch up in the clink.

[MadMarketScientist 11]

Aside from the crooks in Wall Street, how about the crooks in DC?

 

In a new academic study, four university professors examined investment results on more than 16,000 stock transactions made by 300 House delegates from 1985 to 2001. The result was clear: They beat the market by an average of 0.55% per month, around 6.6% a year. The professors note a previous study showed members of the U.S. Senate did so well they outperformed hedge funds.

 

In fact, if members of Congress didn't beat the market, they'd be bigger morons than you already think they are. Why? Because insider trading laws don't apply to members of Congress…

 

You heard that correctly. The Securities and Exchange Act does not apply to members of the U.S. Senate or House of Representatives. Congressional ethics rules say Congressional members aren't allowed to use privileged information for personal gain. But it's just a rule, not a law. It's not legally enforceable. And it's obvious they're taking excess profits out of the stock market…

 

This must be one of the most underreported financial stories of the century. Take one example: The Senate Armed Services Committee forbids staff and presidential appointees requiring Senate confirmation from owning securities in more than 48,000 companies that contract with the Defense Department.

 

But 19 of the 28 senators on that same committee held assets worth between $3.8 million to $10.2 million in companies on the prohibited list between 2004 and 2009.

 

Isn't that unbelievable??

MMS

[Tradewinds 12]

Wow! I didn't know that. Where is that quote from? I'd like to show it to some people.