Summary of Circle of Friends

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Rating

8

Qualities

  • Controversial
  • Engaging
  • Analytical

Recommendation

In 2007, “Perfect Hedge” – one of American history’s most extensive insider-trading probes – investigated a “circle of friends” based in some of the most respected hedge funds, investment banks and Fortune 500 companies. In this compelling tale of intrigue, deception and scandal, financial journalist Charles Gasparino reveals how prosecutors uncovered an ecosystem of corruption. But Gasparino also raises important questions about how much harm insider trading really inflicts on individual investors, compared to other types of financial fraud. While noting that the book dates to 2013, so some factors may have changed, getAbstract recommends this rigorously reported narrative to professional and “little-guy” investors alike for its dissection of the inner workings of inside-information cliques.

About the Author

Charles Gasparino is a correspondent for the Fox Business Network and the Fox News Channel, and a columnist for The New York Post and other news outlets.

 

Summary

“Perfect Hedge”

In 2007, long-time Wall Street trader David Slaine made a calculated decision to cooperate with federal authorities in a government probe of insider trading at major corporations and Wall Street firms. In so doing, Slaine would shield himself from the most bruising charges and potentially long jail sentences associated with insider trading. The government’s investigation, called Perfect Hedge, focused on two industry leaders: hedge fund managers Raj Rajaratnam of Galleon Group and ultimately Steve Cohen of SAC Capital. Slaine provided evidence of an enormous insider trading conspiracy that eventually yielded more than 70 convictions.

Insider Trading

Following the stock market crash of 1929 and the subsequent Great Depression, Congress passed laws limiting the functions of certain financial institutions and created the Securities and Exchange Commission (SEC) to monitor and regulate market activity. The SEC enacted rules to make the stock market “a level playing field,” where all participants have the same knowledge about the securities they are buying or selling.

Insider trading takes place...


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