Lenient Punishment for Illegal Insider Trading is Common in the U.S.

Senior executives and board members of publicly traded U.S. companies often engage in illegal insider trading. In the U.S., illegal insider trading is profitable and carries little penalty if you get caught. Most of all it just plain fun. Ask Robert Moffat.

Here is a real world example. Robert Moffat, a former senior VP at IBM and former board member of Lenovo, pleaded guilty on March 29, 2010 to conspiracy and securities fraud. His expected punishment for enabling illegal insider trading– ZERO TO SIX MONTHS IN JAIL. Here is the kicker. He didn’t have to agree to cooperate with prosecutors in the Galleon case to get the lenient plea deal.

An IBM spokesperson said that Mr. Moffat’s crime was a private matter between the government and Mr. Moffat. No, it is not. It is a matter to disclose to the shareholders of IBM and Lenovo. Is this how senior executives at IBM conduct themselves? Does Lenovo’s board of directors actively engage in illegal insider trading? Does it feel awesome to screw your shareholders?

Mr. Moffat provided the illegal insider trading information to Danielle Chiesi. Mr. Moffat’s lawyer stated that Mr. Moffat did not trade on the information and did not receive financial benefit from the information or illegal insider trading. Are we or the shareholders to believe that Mr. Moffat received nothing in return for spilling confidential information? What exactly did Mr. Moffat receive? Are shareholders to believe that he was just helping Ms. Chiesi because she was a friend? Here is a question no investment professional will ask – Did Mr. Moffat receive a bonus in 2009 from either IBM or Lenovo?

Is any retail or institutional shareholders of IBM or Lenovo angry enough or concerned enough to voice their displeasure with the actions of Mr. Moffat? Of course not. This is how business is now done in America.

What does this mean to you? Illegal insider trading is rampant at publicly traded U.S. corporations. Remember that when you invest in a publicly traded U.S. company. With light sentences for illegal insider trading, you can expect senior executives to continue engaging in that activity. The U.S. Attorney’s office and U.S. Magistrate Judge Frank Maas should be ashamed of themselves for not standing up for shareholders in IBM and Lenovo.

Mr. Moffat will soon be hired as a senior executive at another publicly traded U.S. company so he can continue to screw the investing public. You have been warned.

Source: WSJ 3/30/10.
Note: Raj Rajaratnam, the founder of Galleon, and Danielle Chiesi have plead not guilty in the Galleon illegal insider trading case. Their trial will start in late October of 2010.

Galleon Group, LLC Illegal Insider Trading Case: Another One Bites the Dust

Here you will find the all the exciting details of how to do business in America. This isn’t boring theory or textbook learning. All of the examples are from current, real-world events. Learn from the greatest American business institutions and people how to operate in the U.S.

Illegal insider trading is still fun and profitable. It almost impossible to prosecute and even if convicted the sentences are light.

Here is a real world example. On February 8, 2010, Rajiv Goel, a former Intel Corporation manager, plead guilty to securities fraud. Mr. Goel fed information about Intel’s earning to his friend of 25 years, Raj Rajaratnam, the founder of Galleon Group, LLC. Mr. Goel also provided Mr. Rajaratnam information about Clearwire Corp. Mr. Goel has not been sentenced yet.

Eight people have now plead guilty in the Galleon Group, LLC illegal insider trading case. I will provide a list of their names and associated companies at the end of this post.

What does this mean to you? Be careful when you hire an American company to provide you with products or services. Many employees at American companies will actively seek non-public information about your company so they can earn illegal profits. This is how business is now done in America.

Here are the admitted felons in the Galleon Group, LLC case. These felons will receive light sentences. They will be coming to a hedge fund near you. You have been warned.

Galleon Group, LLC Case Felons: Steven “Tuna” Fortuna; Rajiv Goel, former Intel Corp. manager; Roomy Khan, former Intel Corp. employee; Anil Kumar, former McKinsey & Co. senior partner; Richard Lee; Brien Santarlas, Ropes & Gray LLP; Gauthan Shankar, Schottenfeld Group, LLC; David Slain, Chelsey Capital.

Illegal Insider Trading: Lawyers, Hedge Funds, Consultants, and Corporate Officers - Oh My!

Here you will find the all the exciting details of how to do business in America. This isn’t boring theory or textbook learning. All of the examples are from current, real-world events. Learn from the greatest American business institutions and people how to operate in the U.S.

If you want to know how business is really conducted in the U.S., pay attention to the Galleon Group, LLC case. A phalanx of lawyers, hedge funds, consultants, and corporate officers allegedly conspired to use insider information to earn illegal profits.

Galleon Group, LLC is a U.S. hedge fund founded by Raj Rajaratnam. Mr. Rajaratnam is a billionaire accused of illegal insider trading. He has plead not guilty. Why would a billionaire commit illegal insider trading? Maybe that is how he became a billionaire.

Several people have plead guilty to conspiracy and securities fraud. I will provide updates on the Galleon Group, LLC case as information becomes available. Here are some of the people who have plead guilty.

Mark Lenowitz, Q Capital Investment Partners, LP, Sentenced to 3 years probation.

Steven “Tuna” Fortuna, Hedge Fund Manager, Plead guilty to insider trading.

Roomy Khan, Former Intel employee, plead guilty on October 19, 2009.

Anil Kumar, Former McKinsey & Co. employee, plead guilty to conspiracy and securities fraud on January 7, 2010.

Richard C.B. Lee, hedge fund manager, plead guilty.

Brien Santarlas, Ropes & Gray, LLP law firm, plead guilty on December 10, 2009.

Gauthan Shankar, Schottenfeld Group, LLC hedge fund, plead guilty to insider trading charges.

David Slaine, Chelsey Capital hedge fund, plead guilty.

What does this mean to you? Know that lawyers, consultants, hedge funds, and corporate officers of publicly traded businesses will and do commit illegal insider trading. It is almost impossible to prosecute these people. When doing business in America, know that many in the financial community are trying to extract information from you so they can commit illegal insider trading. You have been warned. This is how business is now done in America.

Notice that Mr. Lenowitz only received three years probation. Those who commit illegal insider trading get light sentences. Lenient sentences ensure that financial professionals will continue to commit illegal insider trading. Congratulations to the U.S. justice system for perpetuating the financial rape of the American people.