The ghost of Raj Rajaratnam still haunts hedge funds. Some make employees sign pledges that they’ve not acted on illicit tips, others snoop on their traders with keystroke-reading software. At the compliance meetings everybody has these days, prison isn’t an off-the-wall topic.
Bloomberg News reports that the illegal-trading probes that netted crooks at more than a dozen funds may have reached an unofficial finale with a whimper last week -- a deal allowing SAC Capital Advisors LLC’s Steven A. Cohen to return to the industry in two years -- but the chill from the fates of Rajaratnam and the 75 others convicted hasn’t faded. The legacy of the crackdown might be a healthy suspicion that Big Brother really is watching.
“It’s now been drilled into the public consciousness that insider trading is a high-risk proposition,” said Stephen Crimmins, a lawyer with the U.S. Securities and Exchange Commission from 1987 to 2001 who’s now with the firm Murphy & McGonigle. “Ten years ago, people figured that the odds were pretty good that they wouldn’t get caught.”
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