Sylvester Stallone once told an interviewer about advice he got from Carl Icahn when they were discussing investments. “The dumbest guy on Wall Street is smarter than you,” Icahn warned him. “Keep your money in the bank.”
The stories behind the scores of insider trading convictions since 2007 make me think Icahn might have been wrong.
Three more Wall Street types were busted this week for running an insider trading scheme that spanned five years and involved over a dozen corporate secrets. Their modus operandi — passing information from lawyer to middleman to trader — was almost identical to the one used by Matthew Kluger, Kenneth Robinson, and Garrett Bauer, who were arrested in 2011.
In a cinematic twist on detection avoidance, the middleman in this week’s case destroyed evidence by eating the Post-it notes and napkins on which he wrote company names, according to the criminal complaint. Apparently this didn’t work any better than the throwaway phones Kluger, Robinson, and Bauer used when they attempted to avoid detection.
The Kluger/Robinson/Bauer case might be worth some study for the next group of guys who want to cheat honest investors and not get caught.