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Hedge Fund Employee of Steve Cohen SAC Jailed in New Insider Trading Scandal, Level Global Investors and Diamondback also caught

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More Hedge Fund Employees were arrested by the FBI on Insider Trading Charges . Note Raj Rajaratnam the high profile hedge fund manager of the technology hedge fund is already cooling his heels in jail after being convicted of insider trading by paying money to company and insiders for illegal information. A number of low rung employees have also been jailed for lesser terms. His friend Rajat Gupta who was a former Mckinsey chairman is also facing charges which may result in conviction for passing confidential information to Rajaratnam.

Raj Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered on Thursday to serve 11 years in prison, one of the longest sentences ever in an insider-trading case. But judges have been handing down some tough sentences recently. A former Galleon employee, stock trader Zvi Goffer, 34, was sentenced last month to 10 years in prison and ordered to forfeit $10 million after being found guilty at trial.Prosecutors had made Rajaratnam the central figure of a sprawling criminal case, unveiled in October 2009, that touched some of America’s top companies, including Goldman Sachs GroupInc, Intel Corp, IBM and the elite McKinsey & Co consultancy.

The employees of these funds SAC, Diamondback and Sigma Capital Management have been arrested by the FBI. Note Sigma Capital is a subsidiary of SAC Advisors which is led by the famous fund manager Steve Cohen who has given stunning returns in the past . In the past scandal also fingers were raised that SAC might have indulged in insider trading as well. Arrest of a SAC employee may mean that the employee may be used to get proof against Steve Cohen.Earlier he said that the insider trading regulations were vague

Hedge fund billionaire Steven A. Cohen in sworn testimony earlier this year called the rules on insider trading “very vague” and said sometimes it’s a “judgment call” as to whether a tidbit about a public company is inside information.

The founder of SAC Capital Advisors LLC, one of the hedge fund industry’s best-known firms, offered up his views on insider trading during two days of deposition testimony in February and April this year as part of a long-running civil lawsuit filed by Canadian insurer Fairfax Financial.

Note Insider Trading though illegal in all countries is widely practised as it is very difficult to prove charges and it is not considered too big a crime. In countries like India where the  rule of law is not that strict, it is done quite blatantly and invites only monetary fines at best . This has encouraged a culture of widespread insider trading profiteering.

Insider Trading in the Indian Stock Markets is quite rampant with promoters of business groups known to indulge in this white collar crime. However it continues to flourish as the market regulator SEBI has not done much about it. Note Insider Trading is very difficult to prove , though the recent conviction and jailing of hedge fund manager in the US Raja Rajratnam and some of his associates shows it can be done if the regulators and enforcers are proactive. India seriously lags behind in cracking down on Insider Trading though in the recent past SEBI has woken up from its stupor.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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