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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: StockDung who wrote (58236)	7/22/2000 10:07:57 PM
From: zonkie	Respond to of 122087

news.cnet.com Adios chat room insider traders. _______ First Internet insider trading case filed. By Reuters The first federal cyberspace insider trading case was filed today, an $8.4 million scheme involving the largest number of people ever charged with profiting on illegal tips. The widespread scheme was born in on online chat room and carried out by at least 19 defendants from New York to Tennessee, officials said. It was the brainchild of a part-time computer graphics worker who pleaded guilty to stealing merger information from investment banks Goldman Sachs and Credit Suisse First Boston where he was sent by a temporary employment agency. Manhattan U.S. Attorney Mary Jo White said the scheme was "insider trading millennium-style" because it was the first criminal Internet case charging illegal trading on non-public tips. She said it was also the largest criminal insider trading case ever brought, both in terms of the number of defendants and the number of deals. The investigation is continuing, she added. "This is also a case that shows the new face of the market where investors and market players are from every walk of life: schoolteacher, film producer, actor, accountant and often part-time day traders on the side," White said. "These defendants talked the talk and walked the walk of the financial marketplace.'' She said that two of the defendants even traded on the confidential information in accounts under the name of "Blue Horseshoe Investments," after the code name for insider trading used by actor Michael Douglas in the movie "Wall Street." "Evidently they also took his message 'greed is good' to heart," the federal prosecutor said. The Securities and Exchange Commission also filed a related civil case against the defendants today in Manhattan federal court. The architect of the scheme, 34-year-old John Freeman, pleaded guilty on Tuesday afternoon to stealing information about 23 deals through both highly sophisticated and very simple means that ranged from piercing the investment banks' codes used to hide their clients' identities to rummaging through coworkers' desks and even the garbage. He admitted passing tips to investors in a chat room as well as to a neighbor, acquaintances made through his wife, and friends he had made while employed at Philip Morris Cos. and at a popular Manhattan bistro, Les Halles, where he worked as a waiter. At Goldman Sachs and CS First Boston, Freeman created and revised documents, including graphs, flow charts, spreadsheets and other materials used in connection with mergers, acquisitions and other business transactions. Ironically, Freeman made the least amount of money in the scheme, about $70,000 to $110,000, primarily in the form of cash kickbacks he received in anonymous birthday cards. He also was paid with three to four cases of wine from a retired schoolteacher who was a Les Halles patron when Freeman was a waiter. In comparison, one of the people charged in the case made as much as $946,000 from insider tips, authorities said. Officials said the scheme began in mid-1997 when Freeman lost money in an investment in Headstrong Group, a helmet manufacturer, and began to meet other disgruntled investors in an America Online "chat room." Among them were defendants James Cooper, a Kentucky insurance agent, and Benton Erskine, a West Virginia day trader and owner of a computer supply store. The three commiserated about their poorly performing investment, and Freeman offered to pass inside tips to them for a percentage of their profits, authorities said. Cooper, who also pleaded guilty, is charged with trading in 16 deals and earning more than $227,000. He also tipped others, including his insurance agent brother and a dentist, both of whom are in Kentucky. He also opened a brokerage account at a branch of Morgan Keegan & Co., a Memphis, Tenn.-based brokerage. He allegedly told the broker that he was getting inside information. The broker, Chad Conner, who is also charged in the case, also allegedly traded on the information and passed it to customers and family members. _________ also see: cnews.tribune.com