Lynn Stuart Parramore has a great interview with hedge fund whiz Jim Chanos about the nature of financial fraud.

Chanos points out that the Justice Department's reluctance to investigate fraud at the biggest financial institutions probably lowers the value of their equity.

We've had the stunning admission by the Justice Department in the past month that they put into their calculus as to whether or not to prosecute crimes in the financial arena as to the systemic effect of that. My head is still reeling from that admission. Most people would agree that that's not the Justice Department's role. And I think it's caused a really reasonable, serious, continued undermining of trust in our markets.

While we may have benefitted from not revealing additional fraud during the dark days of '08 and '09 by indictments and so forth, I still think you have the exogenous cost effect of a lack of trust by our public and by other investors. In effect, it raises the cost of capital. It depresses valuations. If people think that the game is rigged and they're not in on it, they're going to put their money somewhere else. And that's almost impossible to quantify. But you know there's an effect.

In other words, Wall Street executives wondering why their stock continues to lag have their answer: The public doesn't trust them because they know the government is turning a blind eye to fraud.

Legendary hedge fund manager George Soros has reportedly asked to withdraw a lot of money from Bill Ackman's Pershing Square Capital Management.

With the price surging more than 50 percent in just the past three days, even Bitcoin supporters acknowledge that the digital currency is unofficially in bubble territory.

Widespread chatter about the alternative money has sent values parabolic, with one Bitcoin fetching $93.04 at daybreak Monday, then zooming to $141.32 nearing midday Wednesday, according to trading on Mt. Vox, the most popular Bitcoin exchange. (Click here for a Mt. Gox chart)

"There is a little bit of a bubble. I'm not happy about prices going up as fast as they have," said Alan Safahi, CEO of Zip Zap, which bills itself as the largest cash payment processor of Bitcoins. "For any commodity it's normal to have price adjustment, to test new lows and new highs. It's not good to always go up."

Yet that is exactly what Bitcoin has done, swelling from $34 on March 3 all the way up to an intraday high of $147 a month later.

(Read More: Bitcoin Bonanza: Cyprus Crisis Boosts Digital Dollars)

Bitcoin is an open-source digital, highly encrypted currency that is bought and sold online. Buyers give cash and receive a code that allows them to make purchases at a growing number of online retailers.

When Bill Gross looks in the mirror, what does he see?

In his latest monthly "Investment Outlook" commentary, the Pimco chief waxes philosophical. He questions whether he and other legendary investors are really all they're cracked up to be. Maybe guys like Warren Buffett, George Soros, and Ray Dalio were just lucky guys in the right place at the right time.

It's official. Goldman Sachs has inaugurated the second stage of Wall Street's development after Dodd-Frank and the Volcker Rule.

The first post-reform stage was the transformation of proprietary trading units into market-making trading units.

Before Volcker, Wall Street firms risked their own capital trading securities with counterparties. After Volcker, Wall Street firms risked their own capital trading securities in anticipation and reaction to customer order flow. The old way was to ask: "how can we make money by reacting to market events?" The new way is to ask: "how can we make money by reacting to customer reactions to market events?"

See the difference? In the old way, you had counterparties. In the new way, you focus on customers. And those two words—counterparty and customer—are totally spelled differently despite beginning with the same letter.

Officially, this was the "getting rid of things we aren't allowed to have anymore" stage. Hedge funds, private equity funds, prop trading outfits. Goldman was a big leader in shedding the stuff they figured was taboo even before the final rules were written.

And now we've entered the next stage. The "building new things that we think we can have" stage. In this stage, Wall Street firms will attempt to do things that are a lot like what they used to do—but in new ways, using new kinds of legal loopholes because the old ones were sewn shut with Volcker thread.

Goldman is once again taking the lead in this business.

At first glance, the news that employers are close to running through the quota for skilled foreign worker visas seems like another sign of economic buoyancy. But the tide that raises demand for such workers may not lift the financial prospects of workers already in the United States.

The temporary worker program known as H-1B appears to be near reaching its annual cap of 65,000 hires, according to Reuters. Last year the cap was not reached until June.This would be the fastest submission of applications to hire employees under H-1B since 2008.

Although some read this as a signal of increasing confidence by companies, it could indicate further resistance to raising the wages of skilled workers. That is, businesses may increasingly turn to foreign workers to avoid adding to their compensation costs.

Mike Konczal's most recent Wonkblog column focuses in on the potential pitfalls facing any attempt to put reformist libertarians and reformist liberals together into what Michael Lind has been describing as a coalition against rentiers—people who receive a substantial amount of "unearned" income.

Konczal writes:

In a recent series of three posts at Salon, Michael Lind of the New America Foundation argues that this threat of rentiers is back and causing mass stagnation in an age of huge wealth. Lind believes that an anti-rentier agenda could unite a broad coalition, including "owners of productive businesses as well as workers, populist conservatives and liberal reformers."

Meanwhile, conservatives are trying to assemble their own coalition by developing an economic agenda suited to where the country is right now. Tim Carney at the Washington Examiner called for a free-market populism, one that shows that "big government expands the privileges of the privileged class." Others see a younger generation of conservative activists as harbingers of this approach to economic policy.

If that's the case, where might we see overlap on the left and the right, and where might we see stark differences?

One problem Konczal anticipates is that the conservative side of the coalition has too narrow of a view of the problem.

"One issue is that free-market populists tend to only see problems where government is acting, consciously or unconsciously, to boost monopoly power. More reformist liberals would tend to see market power itself as something that occurs naturally and needs some sort of public accountability," Konczal writes.

This strikes me as missing the mark.

The insider trading case against a longtime SAC Capital Advisors trader will be tough for federal prosecutors to prove, but perhaps not as tough as some believe.

On Friday, authorities arrested and charged Michael Steinberg with criminal insider trading in shares of Dell and Nvidia. Steinberg has worked at SAC Capital for 16 years and is the ninth person connected with the firm whom officials have linked to such trading; four have pleaded guilty.

The government alleges that Steinberg received inside information about Dell and Nvidia from Jon Horvath, a former analyst at SAC who has admitted to insider trading.

According to the indictment, in August 2008, Horvath got confidential information about Dell's performance from Jesse Tortora, then an analyst at Diamondback Capital. Tortora had obtained it from Sandeep "Sandy" Goyal, then a tech stock analyst at Neuberger Berman. Goyal had worked at Dell for three years and maintained contacts with former colleagues, at least one of whom shared confidential details with him.

The indictment also says that in May 2009 an analyst at Whittier Trust Co. named Danny Kuo passed Nvidia confidential information to Tortora and Horvath, who gave it to Steinberg. Kuo allegedly had received it from someone at another tech company, who had received it from a person at Nvidia.

Notice something about both those claims? The chain is very long. From the prosecution's view, the ideal insider trading case has an actual insider engaged in trading. The next remove is having someone tipped by an insider engaging in trading. In the Dell-related charges, we have Steinberg tipped by someone who was tipped by someone who was tipped by someone who knew a company insider.

That's a lot of someones standing between Steinberg and the original breach of a legal duty of confidentiality.

If somewhere along the line the knowledge of the illicit and confidential nature of the information was rubbed away, the case could fall apart.

It sounds like the settlement between Steve Cohen's SAC Capital Advisors and the Securities and Exchange Commission might be in trouble.

The SEC and SAC went before U.S. District Judge Victor Marrero today to seek approval for a $602 million settlement of insider-trading claims. It was widely expected that Marrero would just waive through the settlement, as countless judges have done in countless SEC settlements.

But Marrero did not do that. Instead, he pointed out that there seems to be something odd about paying over $600 million without admitting any wrongdoing. He concluded the hearing without rendering a decision about the settlement.

Marrero could still approve the settlement. But he could also pull a Rakoff here.

They won't make a sound no matter how many of them you try to toss in a bucket, and you can't pitch them in a fountain and wish for good luck. But make no mistake, bitcoins are getting big.

The online alternative currency, previously little more than a curiosity in financial markets since its 2009 inception, has zoomed in trading value since the Cyprus banking crisis erupted two weeks ago.

With fears spreading that even insured deposits might not be safe in similar nations hit by banking crises, those looking for a haven to store their wealth have fled to the complicated world of digital cash.

"Incremental demand for bitcoin is coming from the geographic areas most affected by the Cypriot financial crisis—individuals in countries like Greece or Spain, worried that they will be next to feel the threat of deposit taxes," Nicholas Colas, chief market strategist at ConvergEx, said in a report on the startling trend.

(Read More: It's Back! Dark Cloud From Europe Stalls US Stock Market Bull Run)

Bitcoins operate on a network that, at least on the surface, resembles a typical exchange on the capital markets. Buyers can exchange their paper currencies for bitcoins and use them wherever they are accepted. Sellers can exchange their bitcoins back for their original currency.

But the value of the currency has been anything but typical.