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  Wednesday, 24 Nov 2010 | 1:56 PM ET

Why the FBI and SEC Insider Trading Investigation is so Theatrical

Posted By: John Carney

“They could have just as easily come in before hours and gotten what they wanted,” said an employee at Diamondback Capital Management . “Why did this have to be in a dramatic, Hollywood manner?”

Wall Street sign
Paul Giamou | Aurora | Getty Images
Wall Street sign

Criminal defense attorney Gerald Lefcourt said that while the raids on the offices of hedge funds earlier this week might have been prompted by a fear that evidence would be destroyed, he wasn't convinced the motives were legitimate. "There may be another motive, but I view this as an improper motive—and that is to simply scare people," Lefcourt said. "And it certainly does have that effect."

What's going on here? Felix Salmon thinks the raids might have been staged in part to send a message to employees at firms possibly under investigation.

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  Wednesday, 24 Nov 2010 | 1:06 PM ET

Thankful for Options

Posted By: Lori Spechler

What are you giving thanks for this year?

Image Source|Getty Images

Bill Lefkowitz, vFinance Investments wants to give thanks for weekly options . That’s right—weekly options. Activity ramped up this year since the industry standardized options symbology — making it easier to trade and list options and apparently, to make money.

Bill is also grateful that the CBOE listed the “weeklys” today instead of the normal Thursday listing for expiration the following Friday. If you believe the record high on Amazon.com, most people “working” around the Thanksgiving holiday are shopping online. But Bill is more interested in shopping Amazon puts and calls. Listed today are $165 puts and $185 calls — both worth about a buck, both expiring Friday, December 3rd.

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  Wednesday, 24 Nov 2010 | 12:49 PM ET

First Arrest in Insider Trading Probe

Posted By: Ash Bennington

CNBC reports: "The FBI has made an arrest in the so called 'Expert-Network' case. Don Chin Trang Chu was arrested Wednesday on conspiracy charges in connection with his employment at an "expert-networking" firm."

Digital Vision | Photodisc | Getty Images

CNBC is also reporting that Chu planned to depart for Taiwan on November 28, 2010—where he would presumably be harder to reach for US law enforcement.

According to a Reuter's article , a complaint unsealed in federal court in Manhattan revealed the following: Chu, who worked for Primary Global Research based in California, allegedly "arranged for hedge funds to get tips on companies including Atheros Communications Inc, Broadcom Corp and Sierra Wireless Inc."

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  Wednesday, 24 Nov 2010 | 12:35 PM ET

What Can Markets Tell Us About the Conflict in Korea?

Posted By: Ash Bennington

In the last 24 hours, many commentators have remarked upon the threat posed to financial markets by yesterday's Korean artillery exchange.

Smoke rises from South Korea's Yeonpyeong island near the border against North Korea. Dozens of artillery shells fired by North Korea hit the South Korean Island of Yeonpyeong reportedly causing injuries and prompting return fire from South Korean forces.
Getty Images
Smoke rises from South Korea's Yeonpyeong island near the border against North Korea. Dozens of artillery shells fired by North Korea hit the South Korean Island of Yeonpyeong reportedly causing injuries and prompting return fire from South Korean forces.

Their comments have been directed toward global markets in general—and to Asian markets in particular.

But what has been the actual short-term economic damage to South Korea — and how have markets priced that impact?

A Forbes blog Post , written by Robert Olsen, points out that the quantifiable hit maybe less than we anticipated:

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  Wednesday, 24 Nov 2010 | 12:22 PM ET

Has the EU Already Broken Up?

Posted By: Ash Bennington

What if the European Union broke up—and nobody bothered to tell you about it? Well, some are speculating that it has already happened.

Of course, the modality of this breakup isn't an ostentatious Inverse Maastricht Treaty . There have been no ribbon cuttings—nor televised photo ops of smiling finance ministers walking across a national border.

There hasn't even been the kind of somber debate, often heard on BBC News or C-SPAN, hashing out the various merits and disadvantages of such proposal.

It just happened—in the course of doing business.

As I observed in a piece about the possibility of a looming fiscal crisis in the United States : "The most powerful force in the universe isn't love: It's the bond markets."

So, how have the bond markets in Europe been driving a breakup inside the Union that few outside the world of sovereign finance have noticed?

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  Wednesday, 24 Nov 2010 | 11:46 AM ET

Terror on Wall Street

Posted By: John Carney

The insider trading dragnet has sparked terror among the rank and file of Wall Street.

Paul Giamou | Aurora | Getty Images

It's clear from what's been revealed in press reports that federal authorities have been wire-tapping many conversations between employees at big Wall Street firms and outside consultants. They may also have been intercepting emails.

This strikes fear in the hearts of many on Wall Street, who worry that an email may seem incriminating or may be personally embarrassing.

"If I went out late with a client, and we traded emails the next day about our 'crazy night,' it may not be the kind of thing we want splashed across the front page of the Wall Street Journal," one lower-level investment banker said.

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  Wednesday, 24 Nov 2010 | 11:20 AM ET

Zandi: In Defense of Fed Independence

Posted By: Lori Ann LaRocco

The GOP rhetoric against the Fed shows no signs of slowing down this holiday season. Can you imagine what the dinner conversation would be at Thanksgiving Dinner with Representative Ron Paul, Federal Reserve Chairman Bernanke, Senator Bob Corker and Representative Mike Pence? Oh to be a fly on that table!

The Fed has been politicized like never before. Now some Capitol Hill lawmakers are arguing that its dual mandate—price stability and full employment—should be stripped. I decided to speak with Mark Zandi, chief economist of Moody's Analytics about all of this and what's his message to Congress.

MZ: I think the worst thing that could happen is if the Fed was politicized. An a-political Federal Reserve is a cornerstone of our financial system and broader economy. So nothing is more important than maintaining the Fed's independence. And the fact that its wrapped in the political process is just disturbing and disconcerting.

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  Wednesday, 24 Nov 2010 | 10:43 AM ET

On the Record with Broadband’s Kinnucan

Posted By: Lori Spechler
John Kinnucan
CNBC
John Kinnucan

Avid business news junkies and hedge fund traders everywhere are probably dying to know what kind of wine John Kinnucan was drinkin’ when the Feds came “a knockin”. I know I was— so I asked him. “Nebbiolo”, he said. “An Italian red wine”.

Just in time for the holidays, the Feds are unwrapping a far-reaching, market rattling, potentially industry shaking insider trading probe. Familiar names including Janus Capital, Wellington Management and SAC Capital have been roped in. Also, unfamiliar names including one John Kinnucan, founder and sole employee of Broadband Research. John was our guest Tuesday on “The Strategy Session” with David Faber and Gary Kaminsky . John was also the focus of an article Monday in The Wall Street Journal that will change his life forever.

How will it change his life?

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  Wednesday, 24 Nov 2010 | 9:55 AM ET

Guess What Cash-Flush Companies Are Doing With Their Money?

Posted By: Mia Lamar

US companies are still sitting on a trillion dollar plus cash mountain, but this hasn’t changed the fact, some say, that they continue to squirrel away hundreds of billions of dollars in perhaps the least sexy of all places: the bank.

iStockphoto

“You’re just not getting paid to do anything right now," says Brian Kalish, head of the finance practice at the Association for Financial Professionals. "You’re in this ultra low-yield environment...leaving the money in the bank isn’t costing you anything.”

If holding cash in the bank seems a bit…pedestrian, that’s because it kind of is. Many companies could be putting their short-term portfolio to work through a range of strategies, including agency securities, munis and asset-backed securities. But many are even passing on the king of low-risk investments—Treasury bills—as rock-bottom rates make tying up cash in short stints less attractive than the ease of having cash at hand.

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  Wednesday, 24 Nov 2010 | 8:52 AM ET

Big Firms Now Inside Crosshairs of Insider Trading Probe

Posted By: Ash Bennington

S&P Cuts Irish Debt Two Steps, Outlook Negative (Bloomberg) The article quotes Standard & Poor's: "The Irish government looks set to borrow over and above our previous projections to fund further bank capital injections into Ireland’s troubled banking system," Hence, the cut from AA- to A for long-term, and the short-term grade cut from A-1+ to A1. According to the article, the negative outlook stems from"the risk that talks on a European Union-led rescue may fail to stanch capital flight."

Big Firms Now Inside Crosshairs of Insider Trading Probe \(Wall Street Journal\) As we reported yesterday, some of Wall Street's bigger players are now being investigated: "Hedge-fund giants SAC Capital Advisors and Citadel LLC, big mutual-fund company Janus Capital Group Inc. and Wellington Management Co., one of the nation's biggest institutional-investment firms, have received subpoenas from the Manhattan U.S. Attorney's office seeking trading, communications and other data as part of a broad criminal investigation, according to people familiar with the matter." One of the centers of the investigations seems to be the companies that provide "expert-network" services. The Journal article explains: "Such expert-network firms set up meetings and arrange calls between traders seeking an investing edge and current and former managers from hundreds of companies."

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About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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