Gorden Geckko Grows Up – Michael Douglas Makes Insider Trading Infomercial for FBI
Actor Michael Douglas, who famously played the Wall St. icon Gordon Geckko in the Oliver Stone film Wall St., has had a change of heart. The fictional fund manager once famously touted, “Greed is good.” Here is a video of some of the more notable quotes from Mr. Geckko in the movie:
The actor has recently teamed up with the FBI to create a video which encourages would be tipsters to come forward with any insider trading news, and outlines, that greed is not good. Here is the video:
Tipsters who decide to turn into rats and go to the government might do better then to follow Douglas’ advice. Whistleblower lawyer David K. Colapinto
outlines that, “If they just go to the FBI, they are probably going to get zero,” Colapinto said. “The FBI’s not obligated to do anything for them.”
Colapinto said that if informants want a reward for information that exposes financial fraud, they should consult a lawyer — and file a whistleblower claim with the SEC.
Under the SEC’s , tipsters are entitled to 10 to 30 percent of the money the SEC collects if the whistleblower’s information leads to an enforcement action in which sanctions of more than $1 million are ordered. The bounties were ordered by Congress in the aftermath of the financial crisis and were intended to be powerful weapond in the war on Wall Street fraud. That being said Harry Markopolos, who reported the Madoff fraud to the SEC for years, got nothing.
Attempting to diagnose whether or not a hedge fund has the potential to be exposed to insider trading scandals can be a critical part of analysis of a fund’s compliance and trading functions during the operational due diligence process. Investors should attempt to evaluate such risks during a review of operational risk factors including persona
l trading policies.
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NJ Hedge Fund Under FBI Investigation After Partner and Investors’ Money Becomes MIA
According to FINalternatives, Osiris Fund, a New Jersey based hedge fund, is under investigation after one of its’ partners, Peter Zuck fled with investor’s money. Osiris was unlike typical hedge funds in that it allowed investors to invest only a $150,000 minimum into the fund, as opposed to the standard $1 million. 
Michael Spak, one of the three partners in the fund, reported Zuck to the FBI. He said that the situation was currently under investigation. Osiris was started in 2009 and Spak told FINalternatives, “The fund is a ‘hedged’ fund in the truest sense of the word. Our team’s objective is to immunize the volatility of the portfolio which in turn allows us to produce better than average returns consistently.”
Interestingly enough, according to Bloomberg data, the fund ranked third out of 3,527 top performing global hedge funds in April 2010. Since the start of the investigation, no money has been recovered and Zuck is nowhere to be found.
It was announced that Zuck was arrested in 1995 and spent over a year in jail for “misconduct by a corporate official.” Hedge fund operational due diligence would have revealed these public records as well as identified any other questionable aspects of the fund to investors. Investors should be wary of investing in a fund without performing any bit of ops dd because fraud is much more common than we think… 
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Allen Stanford’s Back – Slow to Justice R. Allen Stanford’s Trial Slogs On
Our good friend R. Allen Stanford is back in the news. His trial for the $7 billion dollar fraud he allegedly perpetrated.
To refresh memories regarding Mr. Stanford’s alleged crimes and his passion for cricket see the previous post here and here – and some good lessons on operational due diligence.
The first day of jury selection has ended in the oft-delayed trial of jailed Texas financier R Allen Stanford, who is accused of bilking investors out of $7billion in a vast Ponzi scheme. A federal judge spent Monday questioning 80 potential jurors. Stanford emerged in chains.
In other Stanford news, Bloomberg is reporting that the SEC is asking a judge to determine a payout plan for Stanford victims.
Here are old videos of Stanford in his own words talking about Antigua:
And video of Stanford being treated after being beaten by fellow inmates in prison:
