For those not sure how insider trading works, this clip offers a good overview. In this case it focuses on the trail that preceded a SAC trade in Dell shares. Here is a direct link to a video report. Also see more at: SAC’s Cohen risks losing fortune while keeping freedom
You can see why the practice is so rampant. Easy money indeed. Not only do the perpetrators amass huge personal profits (long and short) on trades nearly assured to win every time but they also then collect 2% a year and 20% of the annual profits from the billions of other people’s money that flow into their funds attracted by their incredible “performance” numbers. In return they become even more obscenely wealthy and–here’s the real kicker–widely respected as brilliant investors who are then asked to counsel other businesses, individuals, governments and charities on how they too can make wise money decisions. Not only that, but because they become so wealthy, they are then able to surround themselves with the best legal team and political representatives that money can buy in order to threaten and intimidate would-be whistle blowers, regulators or prosecutors from questioning their practices. Good gig if you can get it…so long as you don’t mind cheating, lying and breaking the law to take unfair advantage and praise for genius you don’t actually have. But other than that…
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