U.S. feds raid three hedge funds in wide-ranging probe of insider trading

Apple Sale“Federal investigators have turned up the heat on Wall Street, raiding three hedge funds in what one of the targets called a wide-ranging probe of insider trading,” Daniel Wagner and Larry Neumeister report for The Associated Press.

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“The FBI on Monday searched the New York offices of Level Global Investors LP, and the Stamford, Conn., headquarters of Diamondback Capital Management LLC, a law enforcement official said,” Wagner and Neumeister report. “Another FBI official said the agency also searched a third site, at 30 Federal St. in Boston. Hedge fund Loch Capital Management LLC has its headquarters at that address.”

“The raids rattled Wall Street and bank shares slumped Monday as news of FBI action spread. Goldman Sachs Group Inc. sank 3.4 percent, while Bank of America Corp. fell 3.1 percent. Several white-collar defense lawyers in New York said they were bombarded by calls from traders seeking representation,” Wagner and Neumeister report. “The FBI and other law enforcement agencies are investigating insider trading by hedge funds, mutual funds and investment bankers, the Wall Street Journal reported this weekend. The companies allegedly earned tens of millions in illegal profits using secret information about mergers, according to the Journal.”

Full article here.

19 Comments

  1. With code words like “Blue Horseshoe loves Anacott Steel” I doubt they will catch much but the low hanging fruit, grudge types and idiots.

    After all, did you know it’s not illegal for Congressmen to act on insider information? And they refuse to pass a law on themselves to stop it.

    How do you think Nancy Pelosi doubled her net worth of $13 or so million to $26 or so million on a Congressman’s salary of a hundred grand a year?

    If your not getting inside information, your losing, your being played by the big boys. They know exactly what your going to do ahead of time and going to clean your clock.

    Why does Cramer recommend home gamers follow the hedge funds?

  2. Nothing is ever as it seems. Insider trading is wrong, illegal, etc. but I seriously question the timing and politics behind these raids.

    2012 Can’t come soon enough. Amateur hour at the Apollo has gone on long enough.

  3. Because hedge funds are Apple’s biggest detractors and manipulators.

    And that’s because Apple makes itself only attractive to speculative buyers by not offering a dividend to attract long term investors.

    Apple has to keep finding ways to generate income to increase it’s stock price, eventually that will come to a halt as either they reach market saturation or the government blocks them.

    Then their share price will remain constant and begin to decline, because no investor would want to hold them. They will have to offer a dividend then or else.

  4. To be perfectly fair, “The companies allegedly earned tens of millions in illegal profits using secret information about mergers”.

    That level of profiteering from insider trading, “tens of millions” is peanuts for hedge funds. I hope the gov’t has more dirt than that.

  5. “Several white-collar defense lawyers in New York said they were bombarded by calls from traders seeking representation”

    Watch out for the oncoming flood of weasel saliva.

  6. @breeze,

    I don’t think he has a clue about stocks.

    Example: “Apple has to keep finding ways to generate income to increase it’s stock price…”

    If I understand him correctly, he’s basically saying that Apple’s purpose in selling everything they sell… is to increase the price of their stock.

    The value Apple shares to Apple is strictly “on paper.” At best, it might be collateral. It hasn’t put a dime of profit in their coffers. They don’t sell their shares, and when others who do sell theirs, Apple doesn’t see a penny from the transaction.

    As if the value of the Apple stock that Apple holds was anywhere near the profits they’ve made from selling everything they do sell.

  7. … I’m satisfied with a mere 20% – 30% yearly growth. I can’t really afford the lawyers needed to keep the penalties manageable. All on dividend paying stocks, all on trades intended to be in and out in a week to a month. (don’t ask about that stock I’m “holding” at the moment, the other four are on track)
    BM, Nancy Pelosi has held her seat for over 20 years. At half my return, she could have doubled, doubled again, and doubled yet AGAIN, the investments she held when she started.
    And, dividends are paid out of profits. If Apple stops making profits, they won’t have anything to pay a dividend with! Most tech companies “pay a dividend” by plowing their profits back into R&D. So far, this has been working for Apple … their trailing P/E is scary-high but looks much safer when looked at in hindsight.

  8. … I’m satisfied with a mere 20% – 30% yearly growth. I can’t really afford the lawyers needed to keep the penalties manageable. All on dividend paying stocks, all on trades intended to be in and out in a week to a month. (don’t ask about that stock I’m “holding” at the moment, the other four are on track)
    BM, Nancy Pelosi has held her seat for over 20 years. At half my return, she could have doubled, doubled again, and doubled yet AGAIN, the investments she held when she started.
    And, dividends are paid out of profits. If Apple stops making profits, they won’t have anything to pay a dividend with! Most tech companies “pay a dividend” by plowing their profits back into R&D. So far, this has been working for Apple … their trailing P/E is scary-high but looks much safer when looked at in hindsight.

  9. … I’m satisfied with a mere 20% – 30% yearly growth. I can’t really afford the lawyers needed to keep the penalties manageable. All on dividend paying stocks, all on trades intended to be in and out in a week to a month. (don’t ask about that stock I’m “holding” at the moment, the other four are on track)
    BM, Nancy Pelosi has held her seat for over 20 years. At half my return, she could have doubled, doubled again, and doubled yet AGAIN, the investments she held when she started.
    And, dividends are paid out of profits. If Apple stops making profits, they won’t have anything to pay a dividend with! Most tech companies “pay a dividend” by plowing their profits back into R&D. So far, this has been working for Apple … their trailing P/E is scary-high but looks much safer when looked at in hindsight.

  10. Thats why you are posting on a comments board from your mother’s basement instead of running one of the most valuable companies in the world.

    As long as Apple makes and sells awesome products that people want to buy, and love to use, they will NEVER have to offer a dividend to attract ‘investors’.

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