Tomorrow sees the start of the great circus, the insider-trading trial of Raj Rajaratnam of Galleon Group. It should have everything the Justice Department and the media craves: wire taps,a hugely rich defendant and, with luck, maybe even some sex. But most important, it will deflect attention from the real scandal here, the refusal of the Justice Department to pursue the people behind the financial collapse of 2008.
Country Wide’s Mozillo, a friend of Dodd? No criminal charges. Dodd himself? Off to collect $1.5 million per year as a lobbyist in California. Dick Fuld? Jamie Diamon? Fannie Mae’s execs? Are you kidding me? It can be argued, and I do, that insider trading causes no harm to investors – the same can not be said for what establishment Wall Street and Washington’s pals in the mortgage business did. But the latter have political protection, Raj does not.
So enjoy the spectacle, but don’t lose sight of the fact that this is all intended to create the illusion that our government is policing Wall Street when in fact it is doing nothing of the sort.
According to the WSJ, Raj Rajaratnam’s former colleagues, including Choo Beng Lee, are ratting him out. The man’s going down and his Galleon Fund will be dead by the end of the month, which is a fitting end for a man who once paid Kenny Rogers $4 million to come up to the Round Hill place for a birthday bash and play “The Gambler’ eleven times, non-stop. “Somewhere in the darkness, the gambler he broke even”. And all that.
So let’s assume that 557 Round Hill will soon be on the block. Who else might be selling soon? Well, the presence of Choo Beng Lee as a cooperating witness in the broader FBI probe of insider trading is interesting because Mr. Lee once worked for SAC, Steven Cohen’s fund. Jealous competitors have long alleged that Cohen’s success could only come from trading on inside information, an allegation never substantiated. Does Lee have anything that might help prove their case? I have absolutely no idea, but it will be interesting to watch. Cohen’s got something like $45 million tied up in that house of his on Crown Lane which he’ll never get back, but it is certainly worth something. Maybe Jerry Dumas, across the street, will want to expand his land holdings.
And of course, there are always the rumors of another ongoing FBI investigation into mortgage fraud here in Greenwich committed by a certain bank, some of its officers and various developer/builders. These stories make the rounds periodically and nothing has come of them so far, but the latest word on the status of the investigation offers hope to real estate gossip columnists everywhere (or in Greenwich, anyway) that there will soon be grist for the mill. Not that I wish anything bad to happen to these people mind you ….
So we’ll just have to wait and see. My guess is that some large houses will be hitting the market this year, under less than optimum conditions, but that could be for any number of reasons, not just the presence of U.S. Marshals on the front stoop.
So says BusinessInsider, reporting that news of Raj Rajaratnam’s arrest being accomplished by -gulp – FBI wire taps has many of them casting their minds back to various phone conversations they had with other traders over the years and wondering ….
Raj, by the way, is another Greenwich resident and maybe (I’m going to check) another Round Hill Road owner. That street is acquiring a reputation quite different from what it once had.
UPDATE: Round Hill Road it is, number 577. Raj was a neighbor of Dom Devito and may be once again, only this time over at Otis Correctional facility.
DealBreaker reports that nine months after the Wall Street Journal listed Galleon Group as a money handler that would clearly survive the coming troubles, Galleon’s founder and manager has been arrested by the FBI for insider trading. And there are wire taps, so this should be fun.
Maybe all these surveys and ratings of money managers should carry a disclaimer along the lines of, “Unless they get indicted or something – like that’s gonna happen!”. Just until all this gets sorted out.