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Hedge Fund Dominoes
The complaint is not specific about any compensation Kumar may have received, except to say that Kumar was a direct and indirect investor in Galleon’s technology funds.
So for the hedge-fund guys accustomed to not justifying the lucrative fees they charge investors—often 2 percent upfront annually, and 20 percent of the gain—there may finally be a day of reckoning.
And even though the case began during the Bush administration, it could be an early hallmark for the Obama administration widening its attack on greed on Wall Street.
And for McKinsey, it will be a troubling time as it seeks to comfort its many clients, since as a McKinsey veteran tells The Daily Beast: “It is the first blemish they have ever had. I am sure there was a lot more confidential stuff going on than what Kumar may have released.”
Allan Dodds Frank is a business investigative correspondent who specializes in white-collar crime. He also is president of the Overseas Press Club of America.
For inquiries, please contact The Daily Beast at editorial@thedailybeast.com.
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Slim45
Just goes to show you: there are no honest people on Wall Street; none of them has any special skills that enable them to "analyze" securities and guide you to the best deal. For the small time investors, they are making educated guesses and getting well compensated for it. Or trading in inside information, and getting real well compensated, on behalf of well-heeled clients.
mcmchugh99
A lot of the things they've been selling over the last 30 years are more water than real 'assets".
hodad66
Regulation and prosecution, two things that need to be undertaken in earnest to clean up the financial arena. The future of America is at stake as long as these greedy, scam artists can run rampant.
Veronicaxy
Is this another sign of Obama in the White House?
Thanks to those who lead the sting and worked long boring hours to uncover all of this. It's kind of thing that makes me believe in the American justice system.
We need more of signs of tough monitoring.
caveman1957
they should seize all assits untill the investigation is over do not let them hide the money that should be first on the list;;;
mcmchugh99
In reality, the stuff that's been happening on Wall Street for many years is organized crime, and that's how it should be dealt with.
siegeljja
Criticize him if you will for excessive zeal, but that was exactly what Giuliani did - with great success - in going after Wall Street when he was US Attorney in New York.
blink26
Bankers and "consultants = mostly thieves with degrees.
reardongalt
Read Richard Ney's 1970 book "The Wall Street Jungle". Needham and Co. is one of the principals. And that was 39 years ago, just to give you an idea of how systemic this is.
Richard Ney was one of only two people who were not allowed on Johnny Carson's show.
A quote from the lead page of "The Wall Street Jungle":
""The story is told that after he had been deported to Italy, Lucky Luciano granted an interview in which he described a visit to the floor of the New York Stock Exchange. When the operations of floor specialists had been explained to him, he said, 'A terrible thing happened. I realized I'd joined the wrong mob'" (1Ney, 8)."
lolalola
That same Richard Ney also played Greer Garson's son in Mrs Miniver, and was married to her for several years.
thecommissariat
I wonder if this is an isolated "hedge fund related" malfunction, and also wonder whether the authorities have taken so long to put the news into the public domain because they are also building cases against other so-called hedge fund star managers.
When Ivan Boesky was prosecuted for insider trading offences in the 1980s, he plea bargained his case by informing on others, served 2 years of a 3.5 year sentence, and was fined $100 million (that's in 1980's dollars!). There is no doubt that he made large profits from insider trading as an arbitrageur, largely for his own account.
Hedge funds that use established trading criteria or systems, which means to the layman that they can justify each and every trade in a court of law, seem preferable as long as the trades are not fiction a la Madoff !
AbnormalDist
Unless this thing involves more than one high level McKinsey guy, I'd find it difficult to imagine that the storied firm would be significantly affected -- the place will just fire Kumar and be done with it. Galleon, on the other hand, is up sh*t's creek.
http://abnormally-distributed.blogspot.com/
PinstripeSniper
Another arrogant fat cat who thought he wouldn't get caught.
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