Insider trading is the buying or selling of publicly traded company shares by someone who has non-public, meaningful information about those same shares. Often investigations into strange cases of domestic trade involve serious investigations, which can still be controversial. Domestic trade cases also attract a lot of media attention, especially if the accused is a well-known person whose reputation can be ruined all at once. The following notable cases of domestic trade cover the period from the beginning of the 20th century to the present day. We at the Dope Lists are going to take a look at them right now.
After the Great Wall Street Crash of 1929, they suddenly revealed that Albert H. Wiggin, the respected head of the National Bank of Chase, had cut more than 40,000 shares in his own company. He did so by using companies owned by his family to cover up the deals. Wiggin built a position from which he had a personal interest in running his company. In those years, there were no clear and precise rules regarding the short-term shares of his own company. So it turns out that since the 1929 crash, Wiggin has legally made $4 million instead of losing. Moreover, he had also received a lifelong pension from the bank of $100,000 a year. And although she subsequently withdrew her pension due to erupting protests from the public and the media, Wiggin was far from the only one corrupt at the time.
Ivan Boesky is an American stock trader who was embroiled in a domestic trade scandal in the 1980s. Starting in 1975, when he opened his own company, Boesky made vast sums of money by speculating on corporate takeovers. In 1987, Boesky’s corporate partners sued him for misleading legal agreements, and the Securities and Exchange Commission (SEC) launched an investigation into the case. It is revealed that he makes his investment decisions based on data obtained from insiders of the corporation. And although Boeski at one point cooperated with investigators, he was convicted of insider trading and sentenced to 3.5 years in prison and a $100 million fine. Released only after two years, but it did not help – Boesky was finally banned from working with securities.
R. Foster Winans
R. Foster Winans is an author in the Wall Street Journal who writes a column called “Heard on the Street.” According to Winans, in each column, he describes a particular action that often goes up or down. He had arranged a deal in which he agreed to disclose the contents of his column, i.e., the shares, by presenting everything in detail to a group of stockbrokers. They then buy positions in the shares, even before the publication of the column. The brokers claim that they gave part of their profits to Winans in exchange for his insight. Winans was investigated by the SEC, although his case was more specific because the column was Winans’s personal opinion, not confirmatory, confidential inside information. However, the SEC argued that the information in the column belonged to The Wall Street Journal and not to Winans himself.
In 2001, Martha Stewart sold $228,000 worth of ImClone bitcoin shares after her friend, and ImClone founder Sam Waksal sold her shares and told her family to sell based on inside information. A few years later, Martha Stewart was found guilty of conspiracy, obstruction of agency proceedings, and making false statements through investigative bodies.
The year was 2001 when Pequot Capital CEO Art Samberg asked Microsoft employee David Zilkha for inside information about the technology company in correspondence of several emails. The information helped his fund increase by $2.1 million. And although Samberg settled and paid the SEC $28 million, Pequot, once one of Street’s most famous hedge funds, was forced to close permanently in 2009.
Rene Rivkin was the most famous Australian banker. The banker was found guilty in 2004, receiving a ban on stockbroking for the rest of his life, plus nine months in prison. The same was convicted of using confidential, relevant market information to win only $346 per 50,000 shares of Qantas, which he bought in 2001, a few hours after learning that Qantas will merge with Impulse airlines. The story ends up with Rivkin’s suicide.
Joseph Nacchio is a former head of Qwest Communications. He is accused of 42 irregular domestic trade deals, dumping more than $50 million in stock in 2005. Nacchio used information hidden from the public that the company was in a bad position.
Yoshiaki Murakami bought a 1.93 million stake in Nippon Broadcasting after learning that Internet and financial services company Livedoor was trying to gain a 5% stake in the broadcaster. Murakami’s actions led to his arrest in 2006 on charges of acting on non-public, confidential information, from which he earned $25.5 million.
Mitchel Guttenberg, David Tavdy, and Erik Franklin
This is one of the most scandalous insider trading trade cases since the one of Ivan Boesky. It is a multimillion-dollar fraud known to have been set up at the Grand Central Oyster Bar. Mitchell Gutenberg, CEO of UBS, has warned hedge funds and traders of upcoming improvements and declines in stock analysts. David Tavdy and Eric Franklin paid hundreds of thousands of dollars in gratuities, earning $4 million from the deals.
Randi and Christopher Collotta
Randy Collotta is a former Morgan Stanley compliance officer. He is accused of leaking non-public information about several mergers and acquisitions to his husband and a Florida trader. They then passed the information to the Bear Stearns Collotta hedge fund portfolio managers, earning $9,000 for their advice and helped others make $600,000.
Although the above-stated examples are mainly in the United States, other insider trading cases worldwide are probably no less scandalous but simply not made public. However, this is an illegal activity in terms of the moral aspect. Making a lot of money in a short time is attractive, so let’s not have illusions – as long as they make money, there will be such deals.
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