trading records to his phone conversations. But wiretaps on Wall Street aren’t only useful for providing direct evidence; they’re also used as a recruiting tool to find cooperating witnesses. Many people are far more willing to talk after hearing their own voices on wiretaps. When FBI agents have evidence against you, it becomes a much easier decision to work with them. And by the end of 2012, there were 75 people charged in a three- year span, primarily by using tools such as wiretaps, informants and cooperators. The people I know working in finance today assume somebody is always watching. Today, almost everyone left on the Street who used to play fast and loose now operates in a totally different manner. Everyone is a liar until proven otherwise. But this isn’t a blueprint on how to get away with improprieties. The best way to avoid getting caught doing something illegal – don’t do something illegal . Turney Duff is a former trader at one of the biggest hedge funds in the world, the Galleon Group, where its founder and several Galleon employees were found guilty of insider trading. Turney rose through the ranks and
number. And its future earnings guidance was even worse. At the height of the dot-com tech bubble, the company grew faster than its expertise. The headlines coming across the tape were so bad that regulators halted the stock. This was not only bad for Nortel, but catastrophic for the entire market... The bubble was about to burst and we were going to make a boatload of money the next few days. Over the next few weeks, the atmosphere in the office was tense and suspicious. A couple of my fellow traders talked about lawyering up. An investigator with the U.S. Securities and Exchange Commission (SEC) called Raj and wanted to know why he had sold all of his tech stocks. Raj told them he did it because Nortel was pulling out of the Robertson Stephens conference, then listed a couple of generic fundamental reasons that were in the e-mail he had sent himself. Raj had created a paper trail to support his alibi. And it worked. Raj’s excuse was good enough for the SEC. It would take another eight years for electronic communication to catch up with Raj. By 2006, he became one of the FBI’s main focuses. They spent years collecting evidence by reviewing Rajaratnam’s instant messages. And then the feds built their case with wire taps. In court, they used his own voice against him. Raj was accused of making more than $72 million on non-public information (sounded light to me) and then convicted after a trial including more than 2,400 recorded phone calls. In many of those conversations he received information that was considered inside (illegal). And they would compare his
then fell prey to the trappings of Wall Street: money, sex, drugs, alcohol, and power. Turney chronicles his spectacular rise and fall in his bestselling book, The Buy Side: AWall Street Trader’s Tale of Spectacular Excess .
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