Gasparino: "The Government Is Feeling Pretty Cocky" About Its Insider Trading Probe

charlie gasparino

The outcome of the criminal trial of Raj Rajartnam is huge; his loss or win will set a precedent for the government’s huge insider trading probe.

And after the aquittal of Bear Stearns hedge funders Matt Tannin and Ralph Cioff last year, the feds need a win, badly.

And apparently, they’re feeling pretty good about their chances.

Charlie Gasparino writes at the Daily Beast:

I hear the government is feeling pretty cocky about its burgeoning investigation. The new probe has already resulted in a slew of recent arrests… and the closing of one large hedge fund… not to mention the indictment last week of Rujat Gupta, accused of passing tips to Raj Rajaratnam while a director of Goldman Sachs.

“The prosecutors think this insider-trading case is like shooting fish in the barrel,” a prominent attorney who deals with the Justice Department recently told me.

Gasparino also mentions that one crew that might not be feeling as cocky as the FBI, is the one over in Connecticut in the SAC Capital offices. Because of the FBI’s sweeping investigation, Steve Cohen is apparently “considering banning business activities over private email accounts and private mobile phones.”

That confirms the story we previously reported that the hedge fund’s legal team “actively discourages traders and analysts from using email, instant messages and other forms of communication that can leave a paper trail.”

We’ve heard that paranoid hedge funds have hired security firms to sweep for bugs and recording devices — since that’s been one of the FBI’s tactics in the latest round of insider trading arrests — but obviously SAC is getting pre-emptive. And despite the fact that it feels like one of the FBI’s major targets is the SAC chief himself, it also increasingly feels like Cohen will continue to escape any charges of wrongdoing — that is, if he’s guilty of anything at all.

Don’t miss our preview of the Raj trial which is beginning tomorrow >

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