Closing Statements at Goffer Trial

The insider-trading trial of Zvi Goffer, Emanuel Goffer and Michael Kimelman has entered the closing argument stage, with prosecutors characterizing the evidence as "overwhelming". The defense termed the charges "ridiculous".

The prosecutor, Richard Tarlowe, reminded the jury that it had "heard the defendant's own voice" and replayed tapes of several of the phone calls at the center of the trial. Tarlowe emphasized his contention that Goffer and his co-conspirators engaged in a vigorous cover-up of their nefarious activities. Regarding Goffer's use of prepaid cell phones, Tarlowe asked:

"Why do you conceal what you're doing? You conceal because you know what you're doing is wrong, and you don't want to get caught."

Emanuel Goffer's lawyer painted the case as the U.S. versus prepaid phones.

The lawyer for Zvi Goffer, William Barzee, took a different approach with the jury --Barzee called Zvi Goffer a "habitual exaggerator" who made up stories:

"God forbid somebody finds themselves in the cross-hairs of the federal government. They take absolutely innocent facts and they twist it to fit their story…[Goffer] wants to pretend he has inside information, he has an edge."

A second Zvi Goffer lawyer, David Pettus, admitted that Goffer wanted David Slaine's money and that Goffer had been stupid in his dealings. Regarding the insider information charges: "It's ridiculous," Pettus snorted. "It's the real world. Things get out."

Eric Bank, Freelance Writer

© 2011 Hedge Fund Writer LLC

Hong Kong Regulators Not Pleased with Tiger Asia

The Hong Kong Securities and Futures Commission (SFC) is taking a dim view of Tiger Asia Management. The regulator banned the hedge fund from trading following two separate accusations of insider trading that took place in 2008-9. SFC issued a civil ban, as it lacks the jurisdiction for a criminal case.

Simon Westbrook, an SFC representative, stated: "This is a blatant case of insider dealing that happened on more than one occasion by the same outfit. Unfortunately all of the defendants are based in New York. None of them are within the jurisdiction."

However, if any of the three Tiger Asia executives—founder Bill Hwang, head of trading Raymond Park and trade assistant William Tomita, suddenly find themselves in Hong Kong, they will be subject to arrest.

The SFC also wants to freeze approximately $5 million in company assets. According to them, Hwang ordered two illegal trades after garnering confidential information about a couple of Bank of China share placements in 2008 and 2009. The regulator had previously charged Tiger Asia with illegally trading shares of China Construction Bank Corp.

Tiger Asia is denying all wrongdoing, and has asked a Hong Kong court to dismiss the case. Their somewhat disingenuous logic: "It is not appropriate for a civil court to determine what is essentially a criminal offense," according to Tiger Asia's attorney Charles Sussex at court today.

Tiger was served by a subpoena from the U.S. Securities and Exchange Commission last year, apparently arising from the Hong Kong investigation.

Eric Bank, Freelance Writer

© 2011 Hedge Fund Writer LLC

Probe Prompts SAC Investor to Bail Out

SAC Capital Advisors, a $14 billion hedge fund, is at the center of an ongoing Federal probe into insider trading. This has prompted at least one known, though anonymous, investor to request redemption of its shares. Commented the investor:

"We don't want to be fickle. We hate doing this. But the government seems so intent now in getting them and there are additional SAC-related characters tainted. Some dealt with the same stocks at SAC."

The Justice Department is cracking down on insider trading, but neither SAC nor any of its current employees stand accused of wrongdoing. But reports persist of an ongoing investigation centering on founder Steven Cohen's own trading account. Instant messages between SAC employees and Primary Global Research, the expert network under investigation, are part of the evidence in that case. 

Congress is also investigating SAC.

SAC former employees are entangled in the Galleon Group and Primary Global Research insider-trading cases. They include Noah Freeman and Donald Longueuil, both former SAC portfolio managers; they both have pleaded guilty in the Primary Global case. Also, there is Joseph Skowron, a former healthcare fund manager for FrontPoint Partners and SAC alumnus. Skowron was charged in April with insider trading.

It remains to be seen whether these investigations will scare away other investors and prompt further redemptions. One investor commented:

"We will sit tight until there is a real reason to do anything. It is all noise."

UPDATE - JUNE 2, 2011

The New York Times reports that the SEC is conducting two separate insider-trading investigations of SAC Capital Advisors. One concerns SAC's dealings with Medimmune Inc during its acquisition by AstraZeneca. The other investigation is probing the hedge fund's relationships with expert networks.

Eric Bank, Freelance Writer

© 2011 Hedge Fund Writer LLC