On January 7, 2014 was broadcasted the documentary film of Frontline “Catch a trader” which investigates the problem of insider trading. In the film are included interviews with FBI agents and journalists about the results of their ten years long investigation of SAC Capital advisors L.P. who realized huge profits. It was founded by Steven A. Cohen in 1992. The Firm employed about thousand people, and had many offices around the world. Steven A. Cohen was a legend in Wall Street. The Firm developed successful investment strategies for their clients based on reliable information. Turney Duff, a former trader in Galleon Group, tells of his first steps in traders business and enhances the importance of the so called “telephone whisper” of important information that brought a half a million dollars profit in seven minutes and the importance of making good connections with proper people. Preet Bharara, an US Attorney, says in an interview that his office in partnership with FBI under the coordination of Securities and Exchange Commission ( SEC) bought charges against eighty three people and four entities which ended with seventy eight in trials or plea guilty. The former federal judge Richard Holwell tells in his interview about the charming trader Raj Rajaratnam, a man of countless connections, former employee in Galleon Group. He was convicted to eleven years in prison for illegal insider trading. The main task of the movie is to show how the insider trading of information effects the profits of companies like SAC capital Advisors L.P. and brings losses for the rest participants.
We can explain why this case is an insider trading case as we look at the definition of insider trading by Stanislav Dolgopolov “Insider trading refers to transactions in a company’s securities, such as stocks or options, by corporate insiders or their associates, based on information originating within the firm that would, once publicity disclosed, affect the prices of such securities.” ( The Concize Encyclopedia of Economics 2008). Obviously the information gained due to insider trading causes unjustified damages to the participants who do not use such kind of information and big profits to those using it.
The insider trading fits the definition of occupational crime as we consider the fact that the information gained by insider trading can be used only by persons who are directly engaged in the transactions. Only they can affect the conditions and prices of transactions and with their action violate the rules.
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References
Dolgopolov, Stanislav Insider Trading, The Concise Encyclopedia of Economics. 2008. Library of
Economics and Liberty 2008, Retrieved March, 2014
Frontline, Catch a trader, Web www.pbs.org/wgbh/pages/frontline/catch-a-trader
