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Feds Make Insider Trading Arrest

062110handcuffs.jpg The federal authorities have made their first arrest in the wide-ranging insider trading probe: Don Ching Trang Chu, an executive at "expert network" research firm Primary Global Research, was arrested the company's California office. Chu, who resides in Somerset, NJ, had been planning to go to Taiwan on Sunday, and the Wall Street Journal reports, "Mr. Chu has been charged with one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud and fraud in connection with securities. The first count carries a maximum sentence of five years and the second up to 25 years. Both carry a potential fine of $250,000 or twice the gross gain or loss from the offense, prosecutors said."

The feds have been working on the insider trading investigation for three years and the WSJ previously said that it might "ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation." Firms, including SAC Capital run by billionaire Steve Cohen and firms run by former SAC managers, have been raided or hit with subpoenas.

Bloomberg News looked at the world of SAC: "Its founder, 54-year-old Steven A. Cohen, hires traders and gives them some SAC money to manage on their own, according to former employees. If they do well, they get more money to manage and a green light to hire analysts to help research stocks. If they do poorly, they’re out. The result is a firm composed of fiercely competitive pods, with many of the best managers eventually leaving to start their own firms, the former employees say." An attorney said, “That eat-what-you-kill culture is highly competitive. set-up where you have traders running their own portfolios instead of feeding into a centralized investment may make it more tempting for them to cut corners.”

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Comments [rss]

  • jt10000

    If this guy did it, good for him. But "two counts of conspiracy to commit"? Is that it in this hyped up case?

  • PaulaNYC

    If the FBI is arresting people trying to flee insider trading rings, it should be pretty easy.

    Just stop every flight going to Israel.

    And I'm happy to absorb the allegation that I'm "anti-semitic" provided ANYONE can tell me the name of ANY one of the SCORES of American financial fraudster that Israel has EVER extradited back to the USA to face punishment in an American prison.

    Bonus points to ANYONE who can tell me the name of ANY elected official who has ever sought to obtain an extradition agreement with Israel.

  • Jamie McDonald

    It would be very strange if an elected official were to try to obtain an extradition treaty with Israel, because one already exists (14 UST 1707, if you want to see for yourself).

  • virgilstarkwell

    "Both carry a potential fine of $250,000 or twice the gross gain or loss from the offense, prosecutors said."

    cool - i like how defendant's lawyers can't use 'well, my client actually lost money.' as an excuse... as if being a bad insider trader is somehow ok.

  • JacqueMehoff

    He should be arrested for that name. I bet he's a Republican. Now he's going to get his ass Mao Tse donged.

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