The Death of Insider Trading II

On Thursday, prosecutors charged fourteen more people with insider trading. The defendants all have links back to Galleon, in a corrupt web growing broader by the day. Acrimoney pays especially close attention to behavior on Wall Street and inside Hedgistan. Today’s story falls into our favorite category:

You can’t make this stuff up.

The New York Times reported that one of the defendants was tagged ” ‘Octopussy, because his tentacles touched so many confidential sources.’ ” While Octopussy is not bad as aliases go, we respectfully submit an alternative nickname for consideration.

Jaws.

That same defendant, fearing wiretaps and the reach of federal investigators, used disposable cellphones to communicate. And afterwards, the insider trading complete, he bit the sim cards in half. That’s right—chewed them in two—which led to this classic observation from the SEC.

“If you find yourself chewing the memory card in your cellphone to destroy any record of your misconduct, something has gone terribly wrong with your character,” said Robert S. Khuzami, the S.E.C. enforcement director, who announced the agency’s own civil fraud charges against those named in the criminal complaint.

No gray area about insider trading there.

More charges and allegations will follow in the weeks to come. According to The New York Times, the SEC hinted that it is “brushing” against S.A.C. Capital in Greenwich, though no charges have been filed. Of all the sound bites, so to speak, the most ominous comes from Preet Bharara, the Unites States attorney for the Southern District of New York: ” ‘I urge you to come knocking on our door before we come knocking on yours.’ ”

The days of pirate treasure are gone for Galleon and Octopussy (or Jaws, depending on which nickname you prefer.) They just ran into an armada of regulatory enforcement.