How To Concoct An Insider Trading Scheme In A Few Easy Steps

luger teach

Last week the FBI arrested and charged lawyer Matthew Luger and trader Garrett Bauer with conspiracy to commit securities fraud, securities fraud (aka insider trading), conspiracy to commit money laundering and obstruction of justice.

What’s amazing about the alleged scheme is that it is supposed to have gone on for decades.

That means that whatever you say about these guys — and one other person, known as the “middleman” — there’s one thing that’s undeniable: they were pretty good at covering their tracks.

The SEC alleges that the efforts the pair took to conceal their activities “demonstrate that Kluger and Bauer understood that their actions were illegal.”

The government detailed the key methods in their alleged conspiracy, and their decades-long insider trading scheme goes a little something like this.

You find out about future M&A deals by looking at the TITLES of documents in a law firm's internal system

You only use payphones and pre-paid cell phones to discuss trades.

You meet in Atlantic City to disguise huge cash withdrawals as stripper/gambling-related

You regularly destroy your disposable phones and buy new ones with new numbers

You never use email, and only save each others' numbers in your disposable cells

You disguise cash withdrawals by spreading them out out over days and withdrawing from various ATMS

You only deposit the profits in cash, in multiple deposits under $10,000

You keep the rest of the profits in safe deposit boxes

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