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  Wall Street Meets The Wire |
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 | Reported by The Big Money
on Friday, 6 November 2009
(2 weeks ago) |
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Shady hedge fund honchos, beware.
That's the message, the business press declare this morning in their coverage of new charges brought down yesterday against 14 money managers, Wall Street lawyers and other well-connected investors with ties to the Galleon insider trading probe.
The Wall Street Journal describes their alleged criminal dealings as something out of a James Bond movie, "including packages of money, throwaway cellphones, a ringmaster nicknamed "Octopussy" and an associate called "the Greek.'" The New York Times adds the racket "was pierced in part through surveillance and wiretaps." The subterfuge enabled the band of conspirators to net a cool $20 million in profits from dodgy "inside" trades, prosecutors say.
The case came to light last month after federal authorities charged hedge-fund tycoon Raj Rajaratnam, founder of Galleon Group, and five others with masterminding a vast insider trading racket.
And, the NYT reports, more arrests are expected in the coming weeks as a special FBI unit expands its broader probe into the more murky dealings of hedge funds.
Where might the wire take investigators next? "For the first time, the authorities hinted that they might be brushing against the pinnacle of the hedge fund world, S.A.C.
Capital Management, a $12 billion Connecticut fund company," the NYT writes, adding, "neither S.A.C.
nor any current employee has been charged with wrongdoing."
Elsewhere on Wall Street Thursday, there was reason to celebrate.
The Dow once again topped the 10,000 mark after its biggest one-day rise since July.
"Today's big news was that we saw fewer claims for unemployment benefits," said Mike Stanfield, chief investment officer at VSR Financial Services, told CNNMoney.com.
"That suggests that the underlying economics are continuing to improve." Ah, but of course we've been here before.
The Dow has been wildly gyrating above and below 10,000 for much of the month.
But there is some cause for sustained hope this time.
According to the WSJ, the Labor Department reported on Thursday that U.S.
worker productivity improved at its most vigorous rate since the Kennedy Administration "even as employers pushed forward with layoffs and cuts in working hours across a wide range of industries."
Ever since the government threw billions of lifeline bucks at the financial system last year, pols and analysts have been trying to work out where exactly the money went, who really benefited and whether the blunderbuss policy worked.
Well, according to the NYT, one side-affect was to allow "a handful of giant institutions to save up to $25 billion on their borrowing costs," including the likes of General Electric Capital ($1.9 billion in savings), Goldman Sachs ($606 million) as well as smaller sums for Citigroup, Bank of America and Morgan Stanley.
The savings were part of the $4.3 trillion safety net and came in the form of "federal guarantees on more than $300 billion of bonds issued by banks and other financial institutions." But before we get too outraged it turns out the government has turned a profit on this risky business, collecting $9 billion in fees for guaranteeing the bonds.
To the world of Big Oil now and news that, six years after the overthrow of Saddam Hussein, Iraq has agreed a series of new foreign consortium deals to re-invigorate its sleeping giant of an oil industry.
On the heels of a big deal earlier in the week with BP and China National Petroleum Company Iraq's Oil Ministry has granted the first drilling concession to a U.S.
company in the form of consortium deal led by Exxon Mobil to develop the West Qurna-1 oil field (holding an estimated 8.7 billion barrels of reserves) in the south of the country.
Exxon, working with Royal Dutch Shell, offered the highest bid and beat out rival consortiums led by OAO Lukoil, ConocoPhillips and CNPC.
And finally, how is it that employees of Wall Street's most powerful firms were first on the list to get the precious rations of the swine-flu vaccine? According to the WSJ, "Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc.
are among several large New York City employers that got doses of the H1N1 vaccine," prompting an uproar over how the doses should be distributed to the public.
As a result, the Centers for Disease Control and Prevention is warning regional health officials around the country now to distribute the doses to high-risk groups first.
And, no, "high-risk" does not necessarily mean bailed out financial firms.
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