Authorities are set to announce charges against 14 new individuals in the widening Galleon Group insider trading scandal.
Details are coming at a noon press conference, but Reuters reports that former employees of trading firm Schottenfeld Group are among those that will be charged.
It turns out Schottenfeld has a history with illegal market whisperings.
In 2007, trader Paul Berliner used instant messenger to spread a false rumour to other brokers and hedge funds that Alliance Data’s takeover by the Blackstone Group was being changed to $70 a share from $81.75 a share. He then shorted the stock for a profit, according to the SEC.
Without admitting or denying the allegations of securities fraud and market manipulation, Berliner settled with the SEC, paying back the $26,129 in profits; a maximum $130,000 penalty; and barring him from association with any broker or dealer.
Separately, the firm’s head, Rick Schottenfeld, reacted angrily when short sellers were blamed during the financial crisis in September 2008. According to Reuters, Schottenfeld said “There’s no reason loopholes should exist…But…we’re placing the blame in the wrong place. Short sellers are seeing how leveraged financial companies are and are reacting to that.”
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