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Former Dell Execs Involved In Massive Insider Trading Probe
DMandPenfold writes "Two former Dell employees, including a former investor relations manager, were part of a $62 million record-breaking insider trading scam, involving the company's shares as well as Nvidia stock, according to the FBI. The news comes as the U.S. authorities step up their pursuit of inside traders. Two months ago, Galleon hedge fund founder Raj Rajaratnam was sentenced to 11 years in jail for his role in a scam involving AMD, IBM and 3Com stock. Yesterday, Sandeep Goyal, an employee at Dell's U.S. headquarters between 2006 and 2007 before becoming a financial analyst, was arrested. An unnamed co-conspirator in Dell's investor relations department from 2007 to 2009 is also alleged to have been part of the scam. ... Goyal allegedly made $175,000 by providing inside information about Dell to a hedge fund. He has pleaded guilty to charges of securities fraud."
and yet... John Corzine is still walking the streets.
They might be able to start softball team of convicted inside traders at Fed Med by the end of the decade. its something everyone knows is happening, but almost no one gets caught.
I would be curious to hear the libertarian viewpoint on whether insider trading should be a crime?
A truly free market would solve it!
How?
I SAID A TRULY FREE MARKET WOULD SOLVE IT!
Insider trading is hugely common in the corporate world to the point that there is an entire industry surrounding it (Wall Street). Any prosecutions for "insider trading" are totally political. They either upset someone in power, upset a competitor with powerful friends, or didn't do something they were asked to do.
See Quest's CEO as an example. He refused to allow the NSA to spy on Quest's customers and suddenly he is in jail for "insider trading." Opps.
Folks...
You can't refer to the regular posters as "folks", post AC, whip out a scare tactic, and support censorship all in the same breath.
(Actually you CAN, but expect it to be pointed out.)
It's nice to see some action on insider trading scams and valuation fraud, but how about nailing the big fish instead of tossing us minnows and thinking we'll be satisfied. I want to see the sharks hanging on a hook: the Wall Street traders and bankers who've cost the US and global economy literal BILLIONS.
I do not fail; I succeed at finding out what does not work.
if it's good enough for congress....
Yesterday Google announced earnings. At 4:01pm EST, exactly. I was able to get the page at 4:01:05pm EST, and just as a joke at the exact same time I checked out after hours trading on GOOG. It was already down 8%, though 5 minutes earlier it was holding around even on close. Tell me, how anyone was able to parse that document in 4 seconds, place the trade, and have it go through after hours.
The system is already so corrupt and broken that anybody who isn't on the "in" shouldn't ever try to invest except for extreme long term. I don't know why a case like this would surprise anyone.
Dude, you're getting a cell?
Man blir trött av att gå och göra ingenting.
That's been going on since Dell went public.
Not in the least here. The markets are obviously being manipulated.
I prefer the "u" in honour as it seems to be missing these days.
I've grown absolutely disgusted with big business AND the government. These executives are already rich from their salaries/company perks, so why even do something like this in the first place? They don't need the money... what can they buy with it that they already can't afford? I don't understand...is it just a penis-measuring game where executives are looking to make more money than the rest? Libertarianism once appealed to me, but I've seen more and more that people can't be trusted to do the right thing. The existence of a true free market depends on the major players not being a bunch of sociopaths. Giving more power to the government isn't the answer either because their agenda doesn't usually match up with mine. It's a problem with no solution.
Meanwhile, lots of ordinary people can barely afford to get by these days. If I were in charge of a company and earning several million a year, I would sacrifice my personal income for the year and give it to the people working for me instead. They need it more. If you need millions rolling in each year to maintain your lifestyle, you're doing something wrong.
"It is a denial of justice not to stretch out a helping hand to the fallen; that is the common right of humanity."
Nah, Kim Dotcom was a rich white guy too. He just wasn't as good at getting in people's pockets. I mean, pfft, he spent $500,000 on a fireworks display in New Zealand, but that's not nearly enough to make them "lose" his extradition papers.
Bio questions? Ask me to start a Q&A journal. Computer analogies available for most topics!
Why isn't the company they worked for ALSO shut down?
I remember sitting in class in elementary school when the teacher would hold the whole class responsible for something that one individual did. That sucked then, and it would still suck now.
Um, what? The people that get to sell first will not be impacted by the mass sell off of the others. The insider trading restriction allows for all parties to have the opportunity to sell when the news is released. Insider trading is almost the opposite of a free market. In a free market, all parties make decisions based on all information available and is assumed to be perfect. If there are a select few that have more information than others, then this violates this assumption.
They don't need the money... what can they buy with it that they already can't afford?
Small private jets run 20-100M, airliner-size ones can run up to 0.5B.
"When information is power, privacy is freedom" - Jah-Wren Ryel
To be pedantic: Raj Rajaratnam is a US Citizen, residing and (formerly) working in the US, born in Sri Lanka.
Misery loves company. Online misery loves unsuspecting random strangers.
This affects things such as rational pricing of goods, as well as supply and demand. Insider trading is also a momentary arbitrage. While there is nothing inherently wrong with arbitrage, those privy to the information are those that get to take advantage of it while the non-informed parties will suffer. This is not conducive to a true free market.
Follow the logic
I own company X (shareholder)
I hire a agent in a posistion of trust (a C.E.O., for example)
The manager takes / gives away valuable property (i.e. insider information)
At a disadvantage (i.e. lacking insider information) I trade at a disadvantage. (I sell stock too low, I fail to invest, etc.)
Wealth is transferred from me to the insider.
It’s a breach of fiduciary reasonability. Liberations believe in playing hardball, but cheating is another thing.
Consider, that stock prices are based on demand, not the value of the company.
Isn't demand based on the value of the company? If not, what is demand based on? What is your evidence that a person's willingness to pay a certain price for a stock is not related to the value that person sees in the company....?
All insiders? Or just the one who want to prop up the company? Information has a way of leaking out one way or another, and only laws against insider trading can interfere with such a leak.
If there was going to be a cover up, the insiders wouldn't sell.
All insiders? Or just the one who want to prop up the company? Information has a way of leaking out one way or another, and only laws against insider trading can interfere with such a leak.
While there is nothing inherently wrong with arbitrage, those privy to the information are those that get to take advantage of it while the non-informed parties will suffer. This is not conducive to a true free market.
You are simply reasserting what I have already stated is not the case. The "free" in free market refers to the freedom individuals have from force, threat of force, or fraud, and the judicial recourse they have when such rights violations do occur. There is no freedom from ignorance, nor a right to perfect, equally-accessible knowledge.
State, precisely, what the crime is committed when someone who is more well-informed sells sooner than someone who is less well-informed. What rights are violated by such an action?
That Wikipedia article lists a variety of models which conclude that markets can fail, and then pretends that market members are incapable of reading and learning from such models, and adjusting their actions accordingly. Why wouldn't market participants adjust to this new knowledge about how the market supposedly works, in order to avoid the various negative effects that the models predict will happen? Is it that market members are simply stupid and short-sighted, and need to be regulated? Is it that the models aren't actually representative of market function? Or something else?
I think you go too far when you go into China territory.
I think it would be more fair to compare it to the Gilded Age of Robber Barons. Insiders who tilted the rules of the market in their own favor. Jay Gould and Daniel Drew would be good examples. These people gained control of corporations and tilted it towards their own gain vs. the shareholders. Took control of banks and choked off competition. Etc.
I always find it odd that an industry which experiences the least amount of government regulations (tech and Silicon Valley), and flourishes as a result, is so adamant about regulating industry.
Then let me put it into terms that you might more easily understand. It would result in theft of the other non informed players in the game because of the existing arbitrage. This is why insider trading rules exist. You really do see this, right?
I see what you mean about any regulation as being non-free market, but you are taking it to an irrational extreme. You really don't make it sound rational when you equate regulation or government interference as theft. The logical conclusion of a system which allows insider trading would be that others are discourage from investing. Why would I put my money in company X if I know that the people inside of said company are just going to fleece me through less than dubious means by using, for example, insider trading? Look past your dogma for a minute. Sheesh.
To see insider trading going on at a respectable company like Dell of all places. I mean, look at the quality of their products and their stellar technical support (cough, cough).
Excuse me, I must mop up that sarcasm that's been dripping on the floor.
Please do not read this sig. Thank you.
You can have an un-regulated market which does not exhibit Free Market behavior, e.g. monopolies. And you can have a regulated market which comes *much* closer to a Free Market.
Example. The NYSE has at least 3 layers or regulation. The rules of the NYSE is the first layer, and require such things as publicly signalling buy and sell prices which allows efficient , fair, and fast pricing. The the State of NY and and the SEC regulate the market to prevent fraud.
Libertarianism will destroy Free Markets, IMO.
putting the 'B' in LGBTQ+
Then let me put it into terms that you might more easily understand. It would result in theft of the other non informed players in the game because of the existing arbitrage.
You and I both own stock in company ABC. You find out that the company is cooking its books. You sell your stock. you are taking it to an irrational extreme
In what sense is consistently applying a principle an "irrational extreme"? What does "extreme" even mean in this sense, other than to apply a negative connotation? Why should consistency be avoided?
You really don't make it sound rational when you equate regulation or government interference as theft.
Theft is taking someone else's property without their consent, either by force, threat of force, or fraud. Do you disagree with this definition? Does the government not initiate force or threat of force when taking money or property from one individual in order to give it to another? Do you disagree with this description? So if the government initiates force or threat of force in order to take money from someone and give it to someone else, in what way is it not theft?
Why would I put my money in company X if I know that the people inside of said company are just going to fleece me through less than dubious means by using, for example, insider trading?
Why wouldn't you write into your contract, before choosing to put money into company X, that the company should be upfront and give you the same access that insiders are afforded, before you would be willing to put your money in the company?
Real insider trading is done in government, before it releases a law or decision upon a company's future (like knowing whether FDA will deny or allow a new drug to the market), and Senators / Congressmen being bribed in stock options where straight up cash would be considered an illegal bribe, because they voted themselves this little neat trick.
Insider trading idea is a bunch of crap. The only problem is FRAUD, all other trading that is done privately is done based on some form of information.
For a top manager to bet against his company and then tank the stock by doing something that would undermine the company's value is FRAUD.
For a top manager to bet against his company because he THINKS that the company is going in the wrong direction - that's not fraud, that's common sense.
For a government official to accept a bribe in form of a stock option or to short stock of a company before passing a LAW that would hurt that company financially - that is REAL insider trading fraud.
You can't handle the truth.
They purposely hid bad debt from stockholders. They committed fraud.
Note also that so-called "worker bees" would still have been left with $0.009/share stock in such a scenario. Regulation can't prevent fraud and loss of wealth, but judicial recourse allows stockholders to recoup some of the losses from those who committed the fraud.
Most companies don't allow shorting or hedging company stock, at least to higher level employees. Some don't allow it for anyone. This creates conflict of interest.
"piss boy! oh, piss boy!"
- mel brooks
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