Why would hedge fund manager Raj Rajaratnam risk his $1.5 billion fortune for $20 million in illegal gains? said Peter Cohan in DailyFinance. He probably didn’t; it’s more likely that Rajaratnam—arrested for insider trading—and his $3.7 billion fund, Galleon, earned most of their 20 percent annual returns through cheating, with the help of Rajaratnam’s co-defendants from Intel, IBM, McKinsey, and New Castle Partners
What’s notable about this case, said Gwen Robinson in the Financial Times, is the government’s “unprecedented—and extensive—use of wiretaps and other gum-shoe methods,” as if investors were “mobsters.” Embarrassed by the Bernie Madoff fraud, securities investigators are pulling out all the stops to show “they mean business.”
Predictably, the Wall Street Journal is upset about the prosecution:
The U.S. attorney’s implication is that Wall Street ought to watch out because prosecutors are now treating hedge funds like the mafia. This will play well politically given the public’s anti-Wall Street mood, yet probable cause to justify the wiretaps seems to have been provided thanks to the oldest method in law enforcement—a so far unidentified informant who once worked at Galleon.
If super-geniuses like Raj Rajaratnam go Galt and stop their insider trading for fear of being imprisoned, imagine what will happen to the economy.
Polish the Guillotines
At last! Now K-Street will lobby to end warrantless wiretapping.
Violet
Jobs might get created, companies might start producing things that are actually useful, and it might not be cool to work on Wall Street? The horror!
Jon H
“Why would hedge fund manager Raj Rajaratnam risk his $1.5 billion fortune for $20 million in illegal gains?”
No matter what happens, it’s unlikely that his $1.5 billion fortune is at risk in any significant way.
Even if he gets a hefty fine, it’ll probably be less than the interest thrown off by that much money in a year.
4tehlulz
>“unprecedented—and extensive—use of wiretaps and other gum-shoe methods,”
inb4 “Law & Order: Financial District” series.
Xenos
The McKinsey angle on this is shocking. It is the sort of corruption that cynics have claimed is out there, but without much evidence so far.
calipygian
But the same WSJ would probably editorialize that a guy in California who stole a box of Hot Pockets from a 7/11 should go to jail for life because it was his 3rd strike.
How many strikes is Wall Street on again? And how many boxes of Hot Pockets could be bought by all the corrupt motherfuckers there?
Quaker in a Basement
Cheating? I believe the correct word to use here is “stealing.”
Starfish
@Xenos:
There has been evidence of cheating. No one has really done anything about it. Several of the financial bloggers have been pointing out various trades that appeared to happen about an hour or so before a big news release. However, there has been little follow-up on this.
Part of this could be that people trading very large positions do things to try to mask their activities so other traders do not see what they are doing to harm their trades by copying them or beating them to the punch.
joe from Lowell
Oh, now you tell us, WSJ editorial page.
Good thing there weren’t any political calls for terrorist scalps or voter fraud scalps, because it would have been a real bummer to have to reserve judgement about cases like that.
Harumph harumph.
linda
taibbi’s latest is up at rolling stone. there better be some fucking prison time for these bastards of the universe.
http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle/print
Jim
As Lester Freamon said, “Follow the money.” I’d like to see Prezbylewski bust a Goldman Sachs employee in the eye. Could you imagine what McNulty would be like in NY? Season 6 of the Wire is going to rock.
demkat620
@joe from Lowell: I didn’t call for scalps, I called for heads on pikes.
There’s a difference.
beltane
The sense of entitlement with these people is just astounding. It’s OK for low-level drug dealers to be turned in by “unidentified informants”, but when it’s a matter of stealing billions of dollars and sabotaging the US economy, such ordinary law enforcement methods are suddenly gauche.
The WSJ and the rest of them must feel that jail should only be the destination for mobsters who play cards and listen to Frank Sinatra in smokey little clubs in Little Italy.
slag
There better be warrants for those wiretaps.
We all know that liberals are just out to punish success. Why do you hate America so much, DougJ?
jl
I don’t think that the banksters’ and stock jobbers’ complaints will find any sympathy with a wide audience. If there is strong evidence that a bunch of people are committing serious crimes, what is wrong with treating them like, um, let me see what I want to say here… um, of treating them like people who are suspected of committing serious crimes?
But maybe there is a flaw in my argument.
But what the hey, maybe I’ll start thinking like a lower middle class wingnut. Someday I will be stinking rich, and I want to be able to make a stink when I am investigated for swindling to get the fuzz off my tail. But it is OK to taze a black paraplegic in his wheelchair because he didn’t move out of doorway quick enough. Because. Also.
Or because I imagine in my poor oddly thinking little wingnut brain, that the rich swindler is ‘part of my tribe’ so he should get a pass.
In edit: does the fact that there was evidence that these Wall Streeters were in fact acting like mobsters (as opposed to ‘mobsters’) make any difference. Or is there some high principle of the thing that I am missing?
AlanDownunder
This is outrageous. The government is criminalizing investment!
Svensker
@Polish the Guillotines:
Great minds.
beltane
@calipygian: The little people cannot be allowed to freelance in the thievery business. It undermines the social order.
RSA
Have we reached the point that the unjustified prosecution of hedge fund managers is overloading our legal system?
…Good.
MikeJ
My guess is these were not warrantless wiretaps. I don’t think the feds ever used them against people that they expected to have access to lawyers.
Remember, there are not only two systems of courts in this country, the rich and the poor have crimes *investigated* differently too.
mistersnrub
OT: Glenn Beck says, “It’s almost as if we are living in Mao’s China.”
He’s right, the President has rounded up all the intellectuals and they are being shipped off to labor camps as we speak. We are almost there. Almost.
Oops. For a minute there I drifted off and dreamt that Sarah Palin was President.
calipygian
@MikeJ:
Ah yes, it’s Dave Chappelle’s very special episode of Law and Order, where Dave laments the fact that he can’t participate in that white justice system, while Tron the Crack Dealer gets to “plead the fif” in front of Congress.
It’s funny cuz its true!
TenguPhule
Before or after the week long party?
New Yorker
How dumb do you have to be to make it that obvious? Since we’re on the mafia theme here, it reminds me of that scene in “Goodfellas” where DeNiro flips his lid at the low-level guy who just bought a pink Cadillac right after the Lufthansa heist.
El Cid
If you steal $10,000, you’re a thief, and you should be locked up. If you steal $10,000,000,000, you’re one of the “producers” and should be protected from all the “parasites”.
John O
Another wrist-slasher of a post.
I’ve successfully eliminated the cable-gasbags from my life, but teh Smart Blogs are going to be an entirely different and more difficult habit to break.
Edwards turned out to be a piece of stain in the end, but that “two Americas” thing was no joke. Nor has it been dealt with.
asiangrrlMN
@El Cid: In other words, you’re too big to fail.
Calouste
@jl:
Because they’re the elites, that’s why. Now STFU, peasant.
soonergrunt
It’s the same attitude that some in the entertainment industry have about Roman Polanski–It’s not like he murdered anybody, and some laws just shouldn’t apply to the famous/rich/powerful. These laws are for the ‘little people’ to obey, not the high and mighty. They always forget that these laws are specifically to protect the ‘little people’ from the high and mighty.
The only difference between the hollywood Free-Polanski-types and the WSJ editorial board is that the hollywood types are better looking.
Chad S
Does the WSJ know that the reason they started investigating Rajaratnam was because he was donating money to terror fronts?
Keith G
Maybe the super-geniuses should ply their unique talents in an economy with more growth potencial, ie China.
Blue Raven
Y’know, I’d almost have respect for the WSJ’s pearl-clutching if they’d gone with a “gambling at Rick’s” reaction. But nope, they can’t even fake fauxtrage. Is Bart Simpson working there now? I’d swear that had the stink of “nobody saw me do it.”
Nutella
@Polish the Guillotines:
I’m sure those wiretaps were warranted, in both senses of the word.
Polish the Guillotines
@MikeJ:
@Nutella:
It was snark, I tells ya. Pure snark.
mai naem
If I could be bothered I would like to go back to the WSJ editorials about WJC and Lewinsky regarding Linda Tripp and her taping the conversations with Lewinsky. I have a feeling the WSJ didn’t have any problems with that.
kommrade reproductive vigor
a) He didn’t think he’d get caught.
b) Based on observation he believed if he did get caught the fine would amount to little more than tickle on the cheek.
c) Because he could.
d) Greedy motherfuckers have no limits.
e) Laws are for little people.
f) All of the above.
Really, the depth of stupidity is fascinating. Let’s change this baby up a bit:
That would be nonsense, Capone must have been framed!
LOL. LOL, I say!
r€nato
@beltane:
you beat me to it… I guess the only thing I could add is, “chickens coming home to roost”.
Absolutely, prosecutors should treat them like they would an organized crime syndicate. Bastards. We need to see dozens more in federal pound-me-in-the-ass prison. I want every one of these fuckers to at least personally know someone who suffered that fate. It’s the only way I can think of to cure them of their hubris.
r€nato
@soonergrunt:
here, here
gwangung
Because, after all, if they didn’t do anything wrong, they have nothing to worry about.
John Sears
Comparing these people to the Mafia is insulting… to the Mob.
Organized crime has never been as dangerous to the nation as these banksters; the Mafia has a vested interest in the nation surviving, after all, or who else could they extort and skim from?
These psychopaths, on the other hand, are fine with destroying the country, so long as they can also either topple our government or flee the collapse of civilization to some non-extradition tropical paradise.
Wile E. Quixote
The Taibbi piece is interesting. It makes me want to buy Goldman Sachs so I can own a piece of the US government. It also makes me wonder if someone could run a massive naked shorting scam on Goldman Sachs and Merrill Lynch and take them down. There’s also the mention of the fact that there are 300 white guys on Wall Street who are controlling all of this. 300 white guys, 300 bullets, and most of these guys are probably pretty soft targets.
Seriously though we need to amp up the penalties for financial crime. Fraud and other forms of financial chicanery should carry a minimum sentence of 10 years in a federal penitentiary, and then an add on of 1 month in jail for every $100,000 dollars of ill-gotten gains with no possibility of parole, none whatsoever. I don’t give a fuck how well you behave while you’re in the joint. So if my idea were in place Raj Rajaratnam would receive a 10 year sentence plus another 200 months for the 20 million dollars he gained, or a total of 26 years and 8 months in prison.
Simonee
I wonder what Andrew “Makers vs. Takers” Sullivan thinks about this!
These fools simply didn’t think they could get caught, and frankly, who could blame them for thinking that? It just so happens that you get away with shit when regulatory structures are captured and our governing bodies look the other way while telling Wall Street to keep doing its thang.
asiangrrlMN
Please tell me the title of this post was initially Galt’s goal and then you changed it.
Nutella
@Wile E. Quixote:
And they have to pay every penny of their ill-gotten gains in fines, plus 20% to make sure they feel it. With no exceptions for the family home or any of that other stuff that white collar criminals usually get to hang on to. If all they’ve got left after the fine is paid is the clothes they are wearing and a bus ticket out of town, that’s more than enough.
Mr Furious
@Wile E. Quixote: That Taibbi piece made me unsure of whether to go on a Wall Street killing spree or just blow my own brains out…
A couple of things went through my mind:
1. As Coulteresque as it might sound, I actually thought “the 9/11 hijackers shouldn’t’ve wasted their planes on the 82nd floor secretarial pool—they should have gone straight for these motherfuckers on the Street.”
2. Can I really blame Obama at this point? When you are talking about money like this, is the President even safe? Seriously. RFK cracking down on the Mob is nothing compared to actually shutting down this fucking syndicate.
3. We need a Star Chamber.
TenguPhule
I’d make punitive to 200% over what they stole and if they can’t pay, 10 inches of skin from their back removed with a spoon by one of their victims.
TenguPhule
Option A. Always pick the one where Wall Street Dies.
Calouste
@Nutella:
Fixed.
GregB
None of these Randian money stealers cared much about wire-tapping as long as it was done to poor swarthy cabbies and the like.
Now that they are wire-tapping millionaires, well that’s downright intrusion!
-G
Wile E. Quixote
@Mr. Furious
I vote for the “Wall Street Killing Spree” myself. Get a jury with 12 people who have watched their 401k accounts go into the toilet over the last three years and you’ll walk free.
Wall Street Killing Spree would make for an awesome game though, think something along the lines of BioShock, but using the actual likenesses of Lloyd Blankfein, Bernie Madoff, Joe Cassano, Jim Cramer, Angelo Mozilo, Kerry Killinger, etc.
TenguPhule
Carmageddon III: Waxing Wallstreet.
Mr Furious
I might by a game console if someone comes up with that…
DougL (frmrly: Conservatively Liberal)
I still like to play Carmageddon II: Carpocalypse Now when I am in the mood to run stuff over. I like loading up on repair cash, hit the Electro Bastard Ray, hit the Pinball Mode and then crash into an angular object at high speed. Then all you do is keep hitting the repair button while careening all over the place, all the while electrocuting everyone within range.
Yeah, I would buy a copy if it was based on the assholes who fucked us over. In a heartbeat.
I would love to rant about this but I am down to one hand now as my left one is swollen to the point of uselessness and the meds/ultrasound therapy ain’t cutting it.
To keep it short, I hope there is such a thing as karma. If so, there are some big-assed debts coming due and I want to see them pay for it. Taibbi ought to get a Pulitzer for this financial series he is writing but they probably frown on cussing. ;)
El Cid
I kept making the point to all the dumbasses who were cheering warrantless wiretapping by the government that ‘the government’ INCLUDED THE I.R.S., so, don’t get all surprised and whiny and askeert when you find out all your tax-dodging suddenly gets busted.
EarBucket
If hedge fund managers don’t want to be investigated like mobsters, maybe they should stop acting like fucking mobsters.
RememberNovember
I@EarBucket:
Presactly
Irritable Bowels Daily is probably howling over this too.