Saturday, March 16, 2013

The Tale of a Wall Street Trader Turned FBI Spy - Businessweek

The Tale of a Wall Street Trader Turned FBI Spy - Businessweek

The Tale of a Wall Street Trader Turned FBI Spy

By and on December 06, 2012

Craig Drimal never had a clue when he confided in David Slaine about his trading on illegal tips that his former colleague would relay the information to federal agents. And when Drimal passed Slaine a slip of paper with symbols for four stocks that were “in play” as they lunched at a Burger Heaven in midtown Manhattan, he certainly didn’t plan for it to end up in a file at the FBI. The force of Slaine’s betrayal didn’t hit him until Nov. 5, 2009, when Drimal and 13 others where charged with insider trading. Drimal pleaded guilty and last year was sentenced to 5½ years in jail. “He was crushed,” says Arlene Villamia-Drimal, his wife and lawyer. “He believed David was his friend.”
A former Morgan Stanley (MS) managing director and onetime partner at the Galleon Group hedge fund, Slaine spent two years mining for leaks while working undercover for the FBI. The evidence he gathered led directly to the conviction of Drimal and 11 other people and indirectly to an additional half-dozen convictions, according to court papers. His work also helped prosecutors build a case against Galleon Group co-founder Raj Rajaratnam. “Slaine’s cooperation has been nothing short of extraordinary,” Assistant U.S. Attorneys Andrew Fish and Reed Brodsky wrote in court papers before Slaine, 53, was himself sentenced this year on securities fraud and conspiracy charges. He declined to comment for this story.
Through Slaine, the FBI got an insider’s view of Wall Street. Hundreds of reports detailing his contacts with the agency are thick with information both relevant and gossipy (“Raj loves the strip clubs”).

Iv agents can make money for V hedge funds, when the I police such as the SEC catch then they earn commissions with secrecy and deception against their V bosses and other Iv agents. This commission is a plea bargain, they are in effect working for the Bi side of the I police instead of V. The more others they catch the more their sentence is reduced, this can also be a negative sum game where they are like Predatory agents reducing their losses to the O police by turning others in.

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