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Here is what we are reading today:
FBI Opens Investigation Into High Frequency Trading Info Leaks (Bloomberg) - Federal agents are investigating whether high-frequency trading firms break U.S. laws by acting on nonpublic information to gain an edge over competitors. The Federal Bureau of Investigation’s inquiry stems from a multiyear crackdown on insider trading, which has led to at least 79 convictions of hedge-fund traders and others. Agents are examining, for example, whether traders abuse information to act ahead of orders by institutional investors, according to an FBI spokesman. Even trades based on computer algorithms could amount to wire fraud, securities fraud or insider trading.
Pillow Talk Results In Insider Trading (Bloomberg) - wo California husbands who allegedly heard their executive wives discussing nonpublic information about their technology company employers on the phone were sued for insider-trading by securities regulators. The lawsuits are the latest in a string of recent U.S. Securities and Exchange Commission cases involving men, including the husband of former Playboy Enterprises Inc. Chief Executive Officer Christie Hefner, who allegedly traded on inside information they learned from spouses over the objections or without the knowledge of their wives.
Drug Company Seeks Legal Fees For Its Cooperation In SAC Insider Trading Case (DealBook) - Elan Pharmaceuticals is seeking to recoup the more than $1.5 million in legal fees it paid to comply with document requests by the federal government in its insider trading investigation of the hedge fund SAC Capital Advisors. The drug company is asking the federal judge presiding over the hearing in April on the guilty plea and penalty for Steven A. Cohen’s hedge fund to consider it as a victim under the Mandatory Victims Restitution Act. Elan submitted a letter to Judge Laura T. Swain of federal District Court saying it incurred the legal fees from its outside law firm Shearman & Sterling in connection with the SAC inquiry.
Ordinary Decisions With Not So Ordinary Consequences (DealBook) - The Nobel Prize winning physicist Richard P. Feynman once said, “The first principle is that you must not fool yourself and you are the easiest person to fool.” That notion seems especially applicable to white-collar crimes that are the result of ordinary decisions by people who rarely seem to have recognized the path they were going down because they decided to fool themselves. The collapse of the New York law firm Dewey & LeBeouf provides a good example of how a series of seemingly mundane accounting maneuvers led to guilty pleas by seven workers in its financial operation, called the “Dewey Seven” by DealBook, and criminal charges against four others. Expenses were not properly recorded so it seemed that the firm’s net income was higher and false documents were created to make it appear that the firm would receive payments from clients when there was nothing to collect.
Citigroup Uncovered Rogue Trading In Mexico, Fired Bond Traders (Reuters) - Citigroup's (C.N) Mexican subsidiary Banamex fired two bond traders after uncovering rogue trading last year, two sources close to the matter said, raising fresh questions over what controls the troubled unit had in place to police employees. Banamex suffered paper losses from unauthorized trading that ran into the millions or perhaps even tens of millions of dollars, the sources said.