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New York
05 November 2009
U.S. authorities have filed criminal charges against 14 people
allegedly involved in a widening insider trading scandal that has
already snared one of the richest men in America.
Federal authorities
filed fraud and conspiracy charges against lawyers and investment fund
managers and others accused of illegally profiting from the use of
inside information.
U.S. Attorney Preet Bharara said it was a
wakeup call for Wall Street. At Thursday's news conference Bharara
said the alarm bells were getting louder.
"The ethical and legal
judgments of these defendants were flatly wrong," he said. "They
weren't close calls, they weren't nuanced, this is not a grey area.
These men and women have obligations to their employers, their clients
and our markets. And they disregarded those obligations in favor of
personal greed."
The U.S. Attorney said communication and
training amongst the defendants was carried out using throw-away phones
and techniques employed by drug dealers. He described how one of those
arrested, Zvi Goffer, accused of operating of an insider training
network, disposed of his phone.
"After the insider trading
was complete, Goffer destroyed the disposable cell phone by removing
the SIM card, biting it, and breaking the phone in two," he said. "He
threw away half the phone and gave the other half to his tippee to
throw away."
The U.S. Attorney had a warning for insider traders.
"There
are certain moral truths that are self-evident," said Bharara. "And
there should be a moment, hopefully before you are holding a bag of
cash, delivered to you by somebody named Octopussy, that causes anyone
in a position to tip or trade inside information to think twice before
taking such a misguided step."
Today's action was a joint
effort of the U.S. Attorney's office, the FBI and the Securities and
Exchange Commission. Last month, authorities filed related charges
against several others including one of the richest men in the United
States, Raj Rajaratnam, the operator of an large investment company.
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