Photo: AP Images
Remember David Slaine?In case you need a refresher, he’s the Galleon portfolio-turned-informant who led the Feds to Raj Rajaratnam.
Today he’s the subject of a must-read Bloomberg News piece telling the inside story of being an insider trading informant.
It pretty much reads like a movie plot involving a guy who grew up in a working class neighbourhood who went to work on Wall Street and after being caught acting on an illegal tip he has to cooperate with the government by passing along information on his friends all while seeing his marriage come to an end.
In summary, Slaine, who is described as a “dream informant” and a “a tip-mining machine”, has played a crucial role in the government’s massive crack-down on insider trading.
He started cooperating with the government after using an illegal tip on UBS Securities ratings changes while working as head trader at Chelsey Capital. He was sentenced to three years of probation and slapped with a fine.
That being said, while working undercover as an informant for the FBI from 2007 to 2009, Slaine’s tips have helped the Feds build cases against and convict at least a dozen people for insider trading, according to the report.
What’s more is he has taken the stand to testify against some of those traders and has even passed along information on hedge funds including Steve Cohen’s SAC Capital, the report said.
Here’s some insight into how Slaine operated when he was an informant:
- Slaine would copy Instant Message conversations and record phone calls he had with traders and pass them along to the FBI.
- He would point out suspicious trades in companies for the FBI to keep an eye on.
- He would even pass along “gossipy” information he learned about the traders being investigated. For example, he noted that Rajaratnam liked to go to strip clubs, the report said.
- Slaine would also wear a recording device and set up a meeting with someone being probed and record it and return it to the FBI. Sometimes he would wear a recording device to lunch at a place like Burger Haven and record that instance too. It’s said that he wore the recording device in a baseball cap, the report said citing a source familiar.
- When Slaine would gather enough information on these traders the Feds could then get approval to wiretap their phones, the report said citing court documents.
- Sometimes he would even pass along information with people he considered friends including a guy who was a workout buddy of his.
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