Perdido 03

Perdido 03

Thursday, November 25, 2010

Insider Trading Investigation Arrests Begin

Let us all be thankful that some hedge fund managers/criminals are worried about perp walks and wiretaps this Thanksgiving:

The arrest of a research firm executive on charges that he helped hedge funds obtain improper information about publicly traded companies is the first of what is expected to be a new round of cases related to insider trading.

The arrest Wednesday came on the same day that prosecutors won a major victory in its pursuit of insider trading, as a federal judge ruled that wiretapped conversations could be used in the trial of the former hedge fund manager Raj Rajaratnam. The wiretapped communications form the linchpin of the government’s case against Mr. Rajaratnam and also against about two dozen traders and executives implicated in the investigation.

Together, the two developments on Wednesday appeared to ramp up the momentum in the government’s investigation into insider trading. The inquiry is already fast-moving, with raids at three hedge funds on Monday and subpoenas sent to investment firms overseeing billions of dollars.

It entered a new phase on Wednesday with the arrest of Don Chu, an executive at Primary Global Research, a so-called expert-network firm that provides “market intelligence” to hedge funds and other money-management outfits.

Federal agents arrested Mr. Chu at his home in Franklin Township, N.J., according to a spokesman for the F.B.I. Prosecutors said that Mr. Chu, 56, had been scheduled to fly to Taiwan on Sunday. A magistrate released him on a $1 million bond.

So Geoffrey Canada's favorite hedge fund manager - the man he bailed out of jail when he was arrested on insider trading charges - former hedge fund manager Raj Rajaratnam, will get to have all his criminal business aired on the government wiretap in court.

Boy, that can't make his buddy Geoffrey Canada happy.

One wonders if Geoffrey himself is on those tapes?

Regardless, now that the prosecution has won the right to use the wiretap tapes in court, Mr. Canada's hedge fund criminal buddy is going to get an offer for a deal.

Hard to say you're innocent of insider trading charges when they're playing tapes of you engaged in insider trading.

As for the Don Chu arrest, if I were a hedge fund criminal in one of the three hedge funds raided earlier in the week, I'd be having a very uneasy Thanksgiving and Christmas season.

Tis' that time of year when the hedge fund managers get perp walked.

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