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Reporting from New York -
The biggest insider-trading case in a generation expanded further today as federal prosecutors filed criminal charges against 14 investment professionals in a $20-million scheme in which they allegedly swapped tips on a variety of corporate mergers.
The insider-trading network was spearheaded by Zvi Goffer, according to criminal complaints filed in New York. Goffer is a former employee of Galleon Group, the large New York hedge fund whose billionaire founder, Raj Rajaratnam, was charged with insider trading last month.
Today's federal criminal and civil actions bring to 20 the number of hedge fund managers, traders and corporate executives accused of profiting on insider knowledge of company actions that could move stock prices.
Among the alleged co-conspirators in today's complaints, Goffer was nicknamed "Octopussy," a reference to a James Bond film, because he got information from multiple sources, according to the Securities and Exchange Commission, which filed civil lawsuits against them.
Goffer allegedly paid others for the tips, including a lawyer at Ropes & Gray, a law firm that worked on several mergers, according to the complaints.
"While today is a good day for law enforcement, it's a disturbing day as well because we expose the apparent ease with which these Wall Street professionals, corporate insiders, analysts and lawyers disregarded the rules and their duties to clients and shareholders for kickbacks and easy profits," said Rob Khuzami, SEC enforcement director, at a Manhattan news conference.
Goffer tried to hide his actions by using disposable cellphones, according to the government. After one acquisition was announced, for instance, Goffer allegedly destroyed one of the phones by removing its computer chip, biting the phone and breaking it in half. He threw away half the phone and instructed another defendant to take the other half and throw it away elsewhere.
Like the initial case against Rajaratnam, the latest charges rely heavily on phone wiretaps and the use of informants wearing wires -- aggressive techniques that demonstrate the intensity of the effort to stamp out insider trading on Wall Street.
The government probe is continuing.
Prosecutors don't yet know how extensive insider trading is on Wall Street, "but we aim to find out," said Preet Bharara, the U.S. Attorney in Manhattan.
walter.hamilton@latimes.com
The insider-trading network was spearheaded by Zvi Goffer, according to criminal complaints filed in New York. Goffer is a former employee of Galleon Group, the large New York hedge fund whose billionaire founder, Raj Rajaratnam, was charged with insider trading last month.
Today's federal criminal and civil actions bring to 20 the number of hedge fund managers, traders and corporate executives accused of profiting on insider knowledge of company actions that could move stock prices.
Among the alleged co-conspirators in today's complaints, Goffer was nicknamed "Octopussy," a reference to a James Bond film, because he got information from multiple sources, according to the Securities and Exchange Commission, which filed civil lawsuits against them.
Goffer allegedly paid others for the tips, including a lawyer at Ropes & Gray, a law firm that worked on several mergers, according to the complaints.
"While today is a good day for law enforcement, it's a disturbing day as well because we expose the apparent ease with which these Wall Street professionals, corporate insiders, analysts and lawyers disregarded the rules and their duties to clients and shareholders for kickbacks and easy profits," said Rob Khuzami, SEC enforcement director, at a Manhattan news conference.
Goffer tried to hide his actions by using disposable cellphones, according to the government. After one acquisition was announced, for instance, Goffer allegedly destroyed one of the phones by removing its computer chip, biting the phone and breaking it in half. He threw away half the phone and instructed another defendant to take the other half and throw it away elsewhere.
Like the initial case against Rajaratnam, the latest charges rely heavily on phone wiretaps and the use of informants wearing wires -- aggressive techniques that demonstrate the intensity of the effort to stamp out insider trading on Wall Street.
The government probe is continuing.
Prosecutors don't yet know how extensive insider trading is on Wall Street, "but we aim to find out," said Preet Bharara, the U.S. Attorney in Manhattan.
walter.hamilton@latimes.com
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