It’s almost reassuring to know that in this age of massive frauds and banks collapsing thanks to reckless management, there’s still some good old fashioned insider trading going around.
Here’s Bloomberg’s description of the “biggest insider trading case” in two years:
UBS AG and Blackstone Group LP takeover advisers fed information to an insider-trading ring including a former Jefferies Group Inc. money manager in a scheme that yielded more than $8 million in illegal gains, the U.S. Securities and Exchange Commission said.
Nicos Stephanou, associate director of mergers and acquisitions at UBS’s London office, passed information about bids for Albertson’s Inc., ElkCorp and National Health Investors Inc., the SEC said today. Ramesh Chakrapani, a managing director of Blackstone’s takeover advisory unit, leaked tips on two of the deals, it said. The agency sued the pair and five others for involvement in the ring, while federal prosecutors in Manhattan brought related criminal charges.
“Stephanou and Chakrapani were privy to highly confidential information concerning mergers and acquisitions,” the SEC said in its complaint. “Notwithstanding their agreements and duties to maintain the confidentiality of this information, they tipped” other people to the deals.
The former Jefferies Asset Management guy is Joseph Contorinis.
Whether this is a good use of the SEC’s limited resources is an open question. Millions of Americans lost fortunes due to reckless banking, and thousands lost money to Bernie Madoff’s fraud. Can someone tell us who lost money to this scheme?
We can squint our eyes and see that this looks like Blackstone, UBS and Jeffries are getting to use public resources—taxpayer money, in popular parlance—to reduce their own agency costs. After all, it’s these firms that are the only discernable victims here, as the exposure that they have problems keeping deals confidential could cause them reputational damage. Shouldn’t these things be handled by private lawsuits rather than having a public entity police employees cheating their employers?
At least Mark Cuban can point to these guys as an example of what real insider trading looks like.