To Catch A Trader

‘To Catch a Trader’ DR

The documentary, To Catch a Trader, revolves around firms, stocks, and a concept known as insider trading. Insider trading is the illegal practice of trading stocks while having confidential non-public information. Material nonpublic information is any information that could reasonably be expected to affect the price of security and that information is not generally known or available to the public. The film starts off by explaining the concept of nonpublic information and this leads to a highly successful hedge funds firm named S.A.C. Capital Advisors. Hedge funds are a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.
The founder and CEO of S.A.C, Steven Coen and his ‘allies’ are under investigation for insider trading.
The first ally that they show under investigation is Raj Rajaratnam and his firm Galleon Group. It is shown that this firm gets tips about stocks from an abundant of outside sources. Whether it is from low ranking employees of the stock this firm wants to invest in or friends from another firm that has the upper hand, Galleon Group was proven to have insider trading going on and with the help of wiretapping. An interview stated that it is tough to what is inside information. When wiretapping a conversation between two stokers, it is almost impossible to determine what you are looking for. When searching for a ‘hot tip’ it is better to look out for key words. Like how in the beginning, a man got a call a few minutes before a stock went up and was advised to invest in it. Specific words were used and it was clear that this was illegal information. This can’t always be the case in busting someone, but if during the conversation, a stock rising is brought up and it doesn’t seem like just a speculation it is best to keep a watchful eye on the caller and the stocks they intend to invest in. This strategy led to Raj Rajaratnam and his affiliations being
caught. As the documentary progresses, it is shown the different ways inside information is shared and used to help the hedge funders. Emails, phone calls, and even investing into companies that look like they will work out well in the stock market are the few tactics an inside trader would use. This led to the involvement of drug companies such as Elan Corporation and Wyeth. The strategy involved the use of expert networks, a group of professionals who are paid by outsiders for their specialized information and research services. With the enough on how these companies had ‘hot’ drugs about to go into the market, S.A.C pumped cash into these companies to boost their stocks for a better investment. Though insider information informed S.A.C about a potential defect in the drugs for Wyeth, leading S.A.C to stop its constant flow of money to the company. This led to the fall of these drug companies and the inevitable gain of S.A.C. When Coen is bombarded with questions about his knowledge of his workers doing this, he claimed he had no idea of their practices and denies ever using any inside information. Even though he clung to being oblivious, his firm is disbanded and he ends up paying a hefty fine. The reason Coen wasn’t convicted like his other fellow big shot friends, is because of his lack of ‘criminal intent’. Coen proclaimed that he did not know of any insider activity going on in his firm. This lack of knowledge about his own company seems like a stretch to get out of jail. The amount of success he has gained over the years at the rate it did does not seem likely without some form of insider information. There is even evidence that he received an email, but he slips away from the blame with more feigning innocence. He claims he doesn’t even know policies for his own company. These excuses were just a ploy to not be incarcerated and it worked. If the evidence is there and all instances point to this man he should have been held more responsible. Feigning innocence does not mean innocence, he had every right to be convicted just like his companions. One billion dollars is not even a dent in what he has made over his lifetime. Criminal intent is a good thing to keep around, some people just honestly may not know they are committing a felony, but Coen had too much evidence and too man employees that allowed insider information to run the company that it is hard to believe that he did not know what went on.