Seven charged in $60m stock fraud

Source: 7News

Greed on Wall Street set a new record, federal authorities say as they unveil a massive insider trading case charging a hedge fund co-founder with engineering a trade that earned a staggering $53 million in profits.

The illegal trade – the largest transaction ever prosecuted in Manhattan – was part of a $US78 million ($A75 million) scheme involving at least seven financial industry professionals, US Attorney Preet Bharara told reporters.

“Today’s charges illustrate something that should disturb all of us: they show that insider trading activity in recent times has, indeed, been rampant and routine and that this criminal behaviour was known, encouraged and exploited by authority figures in several investment funds,” Bharara said.

Of the $US78 million, nearly $US62 million was earned through tips provided by a Dell Inc employee to a former Dell worker who spread the information among his friends at at least five investment houses, including three hedge funds. Bharara called it “a stunning portrait of organised corruption on a broad scale” and said it raised to 63 the number of people arrested in a government crackdown on insider trading. So far, there have been 56 convictions.

“Each wave of charges and arrests seems to produce leads to lead us to the next phase,” said FBI assistant director-in-charge Janice K. Fedarcyk.

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