When Federal prosecutors began charging individuals connected to so-called Expert Networking firms in connection with the ever widening insider trading scandal, skeptics sniffed that the government’s would never win its cases.
It is not against the law to count customers, arrogant, smug Wall Streeters — sorry for the redundancy — asserted. You can’t be penalized for doing good research, they stated matter-of-factly.
Maybe the cynics ought to start counting the number of convictions and guilty pleas and the total number of years these Wall Street criminals will wind up spending behind bars.
Now that the a jury has convicted Winifred Jiau, a former consultant for expert-network firm Primary Global Research, on securities fraud and conspiracy for dishing proprietary insider information to hedge-fund managers, the smug cynics are no longer making the rounds on CNBC, where they had virtually laughed at the initial charges.
Jiau, a consultant at Primary Global Research, is the first “Expert” to go to trial. Earlier this month Primary Global Research consultant Don Ching Trang Chu pled guilty to conspiracy charges.
Altogether, 44 of 49 hedge-fund managers and others who have been charged with insider trading have been convicted or pleaded guilty, according to The Wall Street Journal’s count. Jiau’s conviction was also the third victory this month alone for prosecutors.
When defendants are not being convicted, they are pleading guilty to criminal charges, beating potential juries to the inevitable.
Even more resounding than the large number of individuals who have been convicted or pleaded guilty is the loud and clear message being sent to hedge fund managers and others on Wall Street—the government is not trying to send people to prison for counting customers or doing outstanding research.
They are sending them to prison for providing extremely precise material proprietary information about Nvidia and Marvell Technology Group—in the case of Jiau—to hedge fund managers.
They are sending them to prison for destroying computer drives with pliers and dumping the pieces in four garbage trucks, in the case of former SAC Capital portfolio manager Donald Longueuil, who in April pleaded guilty to securities fraud and conspiracy.
The government also sent a loud message that they are eager to use wiretaps and cooperating witnesses to obtain their evidence and bring charges.
And it is not intimidated from going after big names, as Galleon founder Raj Rajaratnam can confirm.
A free market is the best system. But it only works when the regulators who engage in the checks and balances of the system vigilantly do their jobs.
They did a great investigative job and have put a scare--hopefully--into those arrogant creeps who don’t think multimillion dollar bonuses earned the legitimate way are enough to live on. Now they will make a few pennies per hour doing mundane tasks in a locked-up environment.
