Feds investigating "culture of pervasive insider trading" on Wall Street


A Nov. 20 Wall Street Journal article reported that the FBI and SEC are investigating widespread insider trading on Wall Street, involving a variety of schemes in which non-public information about forthcoming mergers and other corporate activity was disseminated to hedgefund managers and other professional investors in advance, allowing them to essentially place no-lose bets on things they knew were going to happen.


A few things stand out about the investigation:

  1. Goldman Sachs is involved in certain aspects of it. (Now there's a tremendous surprise.)
  2. The healthcare industry figures prominently. (See parentheses above.)
  3. This quote from the U.S. Attorney in Manhattan: "Illegal insider trading is rampant [on Wall Street], and may even be on the rise."
  4. It's been going on for at least three years, which means that the conduct under scrutiny was happening well before the current financial crisis. That in turn implies that, even while the greatest rip-off in world financial history was going on in plain sight, some of Wall Street's finest corporate citizens weren't satisfied making millions of dollars through the fixed-casino game of over-leveraged securities, and instead chose to essentially "tunnel into the vault while the bank was closed" to steal even more money.


No doubt the Journal and various other commentators will opine that this is yet another a case of a few "rotten apples", but coming as it does amidst the aforementioned open-air drug market that was the CDO shellgame, it's hard not to see this instead as just another example of an ongoing, systemic, and organized criminal racket akin to the mafia, drug cartels, and mass-exploitation industries such as forced/sweatshop labor and resource extraction ...