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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, November 21, 2010

Goldman Sachs Being Investigated?

The Rolling Stone article on the insider-trading investigation is well worth reading.

Goldman In Insider Trading Probe?
by Matt Taibbi - Rolling Stone

News leaked out today that the feds will soon be herding a whole pen full of Wall Street firms into court on insider trading charges, including, reportedly, our old friends Goldman, Sachs.

The basic charge here is that investment banks and other firms were leaking insider info about things like mergers to closely-allied hedge funds, who in turn placed the requisite bets on or against the companies in question.

The most interesting detail in the WSJ piece, to me, was a bit about an email sent by one John Kinnucan, a principal at an Oregon-based company called Broadband Research, to a number of his clients. The email reads, in part, as follows:

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information… (They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

Aside from the amusing detail here in which Kinnucan brags about turning down an offer to cooperate with the feds (I ain't no stinking rat!) the thing to note here is the list of clients he sent this email to. Those include hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.

Those are some interesting MF-ing names.

Citadel and SAC, along with Goldman and David Einhorn's Greenlight Capital, were among the firms subpoenaed by Lehman Brothers lawyers after that latter firm exploded in 2008. The allegation then was that a number of hedge firms worked with banks and other companies to spread rumors about Lehman at the same time some of those funds were holding big short positions.

Read the rest of the article here


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