Sounds like Eric Holder and the Justice Department decided to break a boy just because they can:
SAC Capital Advisors has agreed to plead guilty to insider trading violations and pay a record $1.2 billion penalty, becoming the first large Wall Street firm in a generation to confess to criminal conduct. The move caps a decade-long investigation that turned a once mighty hedge fund into a symbol of financial wrongdoing.
The guilty plea and fine paid by SAC, which is owned by the billionaire investor Steven A. Cohen, are part of a broader plea deal that federal prosecutors in Manhattan announced on Monday. It also will impose a five-year probation on the fund and require SAC to terminate its business of managing money for outside investors, though the firm will probably continue to manage Mr. Cohen’s fortune.
If only we had a more business-friendly President in charge, this kind of creeping socialism would have been beaten back long ago.
Just Some Fuckhead, Thought Leader
Wow, I just assumed Martha Stewart was the only one guilty of insider trading. So who is going to jail (other than Martha Stewart)?
Tommy
@Just Some Fuckhead, Thought Leader: I almost wrote that. Heck Mark Cuban just won his case on a similar thing. Look insider trading is wrong. But do you think it isn’t happening 24/7 with the super rich and the hedge funds they deal with, that you and I could never get access too?
I have mentioned here my parents have a lot of wealth. Not billions. Nor hundreds of millions. Not even close.
But somehow no matter what happens with our economy, they always make money. When my 401K was bleeding money they were making money. Those with millions will always make money. It is just the way this nations works.
Omnes Omnibus
@Just Some Fuckhead, Thought Leader: Quite a few people.
ETA: Here is something a little more recent
burnspbesq
Someone (my money is on aimai, although Villago is also a sound bet) will be along any time now to bitch about the fact that the insider trading convictions are meaningless while the “real criminals” who “engineered” the current recession are not also going to jail.
Well …
Sometimes people avoid going to jail because they have better lawyers than the Government. Sometimes people avoid going to jail because the Government is aware of weaknesses in its case and makes the best deal it can rather than risking a loss at trial. And sometimes, people avoid going to jail because their conduct, while reprehensible, doesn’t actually violate any currently in-force criminal statute.
Fuzzy
This too will make the Dow go up. Why is it even reported as it has no bearing on the economy. Hang ’em all I say.
Just Some Fuckhead, Thought Leader
@burnspbesq: They haven’t built a jail yet that can hold a corporate person.
xenos
@Just Some Fuckhead, Thought Leader: They can be killed, however.
MattF
Felix Salmon’s great post on the SEC vs. Stevie Cohen:
http://blogs.reuters.com/felix-salmon/2013/07/21/the-secs-important-case-against-stevie-cohen/
Salmon doesn’t define ‘black edge’, but it means what you think it means.
EconWatcher
The SEC and DOJ like to bring insider trading cases because, among the financial crimes committed by the great and powerful, they’re relatively easy to explain to a jury, so they’re relatively easy to prove:
OK, he knew things other people didn’t, and he got that information from a confidential relationship that he wasn’t supposed to exploit for personal gain. And it was unfair for him to trade while knowing what others couldn’t. People get that.
In fact, they will often try to recast an accounting fraud case as an insider trading case. Let’s say that financial statements were misstated because they misinformed or failed to inform investors of certain material facts. It’s very hard to prove what the accounting standards required, because they are often not completely black and white, and a well -heeled defendant can hire some fancy expert witnesses to muck up the issue. It’s usually almost impossible to prove beyond a reasonable doubt, unless you have emails that more or less confess the crime or something like that.
But if the guys responsible for the bad accounting also sold shares, you can just argue to the jury that they unfairly gained from information that was never disclosed to investors. You don’t have to prove that they violated accounting rules.
And that, friends, is a big part of the explanation for why there have been so many high-profile insider trading cases in the last few years, but so few for the reckless risk taking and misleading disclosures surrounding the credit crisis.
It is very hard to prove an accounting-related crime when we have a plentiful supply of well-credentialed experts willing to say just about anything to a jury for the right sum.
patroclus
Well, the settlement and lawsuits have been led by Rheet Bharara, the U.S. Attorney for the SDNY and not Eric Holder at main Justice and SAC and Steve Cohan were both engaged in massive insider trading at both the company level and by individuals. And they basically involved the newish “expert rings” which, in recent years, have more or less displaced the more traditional industry analysts that painstakingly read prospectuses and pore over actual balance sheets so as to assess the fundamental financial strength of publically traded companies. And there was no supervision or compliance at SAC – it was essentially a Gordon Gekko operation rather than a real investment company. My view is that the settlement is smaller than it should have been – despite being the largest in history. SAC will no longer be licensed to trade other people’s money until they actually put a compliance program in place. And the (separate) SEC suit will still be prosecuted.
patroclus
Sorry, that’s Preet Bharara.
Just Some Fuckhead, Thought Leader
@Tommy: Parasites operate the same way, right up until the host dies.
Xecky Gilchrist
Has this news been making the rounds on hate radio? The office wingnut is upset about something this morning. More than usual. I have my headphones on because who wants to listen to that, well, EVER, especially early on a Monday?
Jane2
I’m sure the $1.2 billion was factored in as the cost of doing business.
Morbo
Maria Bartiromo weeps today. CNBC should bottle her tears and sell them to OWSers.
aimai
@burnspbesq: You are completely delusional. You have me mistaken for someone else, apparently. But you go right on shadow boxing with the phantoms in your head if it makes you happy.
Roger That
@burnspbesq: was your post created using a Megan McArdle simulator?
Just Some Fuckhead, Thought Leader
@Xecky Gilchrist: He’s prolly upset about the Halperin/Heilemann news that Obama orders a drone killing every morning with his breakfast because he’s on the Splatkins diet.
Quaker in a Basement
Key phrase in that story: “…decade long investigation…”
Hold your fire, wingers.
kc
though the firm will probably continue to manage Mr. Cohen’s fortune.
Wow, that’ll teach’em.
Mino
@burnspbesq: And sometimes people don’t go to jail because the ones who might put them there are not doing their jobs, or are prevented by superiors.
You should admit that does happen.
Guess nobody wants Warren in their face. Or at least something has lit a fire under their asses.
Just Some Fuckhead, Thought Leader
@Mino: Warren’ed in 20. I believe that’s a new record.
Omnes Omnibus
@Mino:
Or multi-year investigations into complex issues are now yielding results.
EconWatcher
@Mino:
It certainly does happen that the guilty sometimes get away because prosecutors aren’t doing their jobs. But that happens less than many people on this blog seem to think.
For better or worse (mostly for better), we have an adversarial system of justice. And in that system, it is very hard to prove a complex financial crime, absent a lucky find of unusually damning evidence such as candid and clear emails that lay the whole thing out. See my comment above.
Just Some Fuckhead, Thought Leader
@Omnes Omnibus:
How you say that with a straight face is disturbing.
Cervantes
@Jane2: CEO Steve Cohen’s annual income alone is on the same order of magnitude.
aimai
@Omnes Omnibus: Yes, this. Its a ten year investigation with a lot of people flipping and testifying. It can have absolutely nothing to do with Warren (my Senator) unless she had access to President Obama’s time machine. In that case all bets are off.
Omnes Omnibus
@aimai: I would also point out that the Justice Department started a crackdown on insider trading in 2009.*
*2009, 2009. Now why does that year stick out in my mind….
burnspbesq
@Just Some Fuckhead, Thought Leader:
True, but Andersen got the death penalty.
burnspbesq
@Just Some Fuckhead, Thought Leader:
Some of us have been there and done that.
burnspbesq
The winner of the Scariest Costume contest at the Bankers’ Halloween Party came dressed as Mary Jo White. The runner-up came dressed as Preet Bharara.
burnspbesq
@aimai:
That’s the response of someone who has been found out for what they are.
Mandalay
@burnspbesq: Completely OT, but from the link in post #3….
Why do people get sentenced to “one year and one day” rather than just “one year”?
Just Some Fuckhead, Thought Leader
@Mandalay:
Screws up your resume chronology.
Mnemosyne
@Mandalay:
IIRC, it has something to do with the difference between a felony and a misdemeanor — a misdemeanor carries a sentence of one year or less, so the “one year and one day” brings it over the threshold to a felony.
Omnes Omnibus
@Mnemosyne: Like everything in the law there is more to it, but that answer gets to the nub of it.
rikyrah
awe…poor baby
C.V. Danes
@burnspbesq:
And sometimes, people avoid going to jail because the rules don’t apply to them..
C.V. Danes
Still no jail time. And unless he becomes destitute, then $1.2 billion is just so much chump change. He can still go sulk on his yacht and live like a king for the rest of his life.
Just Some Fuckhead, Thought Leader
@C.V. Danes: He’s going to spend half his fortune clearing his good name.
aimai
@burnspbesq: Woah. Back away from the crack pipe burnsie. Your original comment implied that I am anti Obama and Holder and that I could be relied upon to take a firebaggerish take on this current case. You really, really, really have me confused with one of your other enemies. I’m a pretty well known Obot and have never really discussed Holder or the financial issues and crimes of the bankers. But please, proceed, if you need to manufacture an enemy out of thin air in order to create some tiny bit of consequence for yourself go right ahead. I don’t see what you get for it but clearly you find it to your benefit or your pleasure.
Chris T.
@Tommy:
Well, they lost a lot in the crash of 2008, after Lehman Brothers went under. Hence the Bush admin hopping to it and shoring up the system with a modest (/sarcasm) $700B shot in the arm.
But that was brief and temporary, and now all is well again.