The plan was far reaching, but the work was done from one place.
Investigators from the Securities and Exchange Commission used the distinctive IP address associated--your PC's virtual fingerprint--with Internet trades to track down an insider trading ring involving bankers at Goldman Sachs, Merrill Lynch, a printing press employee in Wisconsin, and a downtown Manhattan spa owner, according to Marketwatch.
"If Eliot Spitzer's years as New York's attorney general have taught us anything, it's that what happens on the Internet does not stay on the Internet," wrote columnist David Weidner.
The case involved two bankers, Stanislav Shpigelman and Eugene Plotkin, who convinced a friend, Juan Renteria, to get a job at a Wisconsin printing plant where Business Week is born each week in its newsstand form. The team broke from the usual get-a-tip, pass-it-on heat-of-the-moment type cases insider trading usually involves. Instead, they stopped Business Week from hitting the streets, so that they could act on big mergers before they were big news.
For example, days before Adidas announced plans to buy Reebok, the group bought large amounts of Reebok stock through several different Internet brokerage accounts. Soon after the deal was made public, a tipster alerted the SEC.
The investigation revealed several similar activities, and resulted in $6 million worth of frozen assets.
"This is one of the most predacious and audacious insider trading cases the SEC has seen," said David Markowitz, of the SEC's Northeast Regional Office.
The co-conspirators tried to cover their tracks, opening accounts in pseudonyms, registering accounts from mailing addresses in Croatia and the Dominican Republic and elsewhere.
Although the addresses were far-flung, regulators were able to track the Reebok trades, and others, back to a single Manhattan computer.
"People often use Internet trading accounts to cover up their trading activity," Markowitz said. "People don't' realize that there are different kinds of evidentiary trails being left behind."
No matter the type of product traded--single stock, exchange-traded fund, or otherwise--electronic trading offers investigators a trail back to the scene of the crime.
As a technology expert told Weidner, "The Internet is a giant log book."
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.