SEC Whistleblower and the Fake Insider Trading Crackdown

Here’s what’s in your Prime Interest today:
Eric Holder, the US Attorney General, is cracking down on Wall Street — according to himself, anyway. He said anybody who’s inflicted damage on our financial markets should not think they’re out of the woods. Well, there is this small problem with something called statute of limitations. And it’s run out on a substantial number of criminal acts committed — both before and after the last financial crisis. Unfortunately, it seems the only people being prosecuted these days are mid-level employees and hedge funds for insider trading. While it’s certainly a crime, insider trading did not cause the last financial crisis, nor will it cause a future one.

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In 2005, Gary Aguirre was senior council at the Securities Exchange Commission. He investigated a case involving insider trading at a major hedge fund, Pequot Capital Management. After a little digging, it became apparent that the soon-to-be CEO of Morgan Stanley, John Mack, was involved. Mack also happened to be a major campaign contributor to George W. Bush. Mr. Aguirre’s supervisor warned him that Mack was untouchable due to his political connections. So Pequot’s attorneys met with the SEC Director of Enforcement. The result? The case would be — first “narrowed” — then Mack’s testimony was delayed. The statute of limitations for Mack eventually ran out, and Mr. Aguirre complained about Mack’s “political clout.” Big mistake. Because he was promptly fired. Bob speaks with Gary Aguirre about his experience at the SEC.

Then Perianne digs into the fine print of whistleblowing, and just how the perception of these individuals has changed over the decades — from Ellsberg to Manning. Manning was sentenced to 35 years in prison today, although he may serve as few as eight additional years, if paroled. Finally, Daily Duel-er regular, Sam Sacks, will battle the question of whether Wall Street culture is endemic, systemic, or simply — psychopathic.

Plus, hypocrisy has reached new heights in India. Just days after the prime minister of India announced there would be currency crisis — as had happened in 1991 — overnight, the Reserve Bank of India — basically India’s Fed — announced their first quantitative easing program. Welcome to the club, India.


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