More Quick and Dirty Tips for Your Insider Trading Scheme

Over this long holiday weekend, if you decide to hatch a plan to trade on non-public information here are a few tips to keep the Feds off your tail for a couple of extra weeks1 until your inevitable capture. 
 
Your “golf-coded emails” aren’t clever
Sean and Robert Stewart are a father-son insider trading duo charged this month with reaping illicit profits of $1.1 million over four years. Sean, a high-ranking investment banker, tipped off his father Robert with inside information on several mergers and acquisitions related to Sean’s clients.
 
Robert, a CPA and CFO of a publicly traded tech company, eventually recruited a friend to make the trades for him. Robert and his buddy communicated in person and through “golf-coded” emails. (See? Learning to golf is crucial whether you want to be a partner or a smooth criminal.) 
 
Obviously, the “golf-coded” emails lined right up with the timing of the insider trades and read, "might have an opportunity to play golf — but would need to book the reservation as soon as the office opens Tuesday morning” and "Thanks – saw local story about high cost of golf reservations since a foreign company purchased all — even more expensive than imagined." So slick.
 
What did Dad give Sean in exchange for the insider tips? Robert paid for his son’s wedding.
 
If my father wanted me to risk my career, professional reputation and freedom in exchange for my wedding costs, he had better fly me down the aisle in a goddamn helicopter.
 
Don’t Run Yo Mouf. Insider information is secret
Learn that a partner is sleeping with an intern? Go ahead, tell fifteen people in the same day. Better yet, send Going Concern a tip. Nothing illegal about that. Learn insider information? Keep your freaking mouth shut.
 
According to prosecutors, a financial analyst who received insider information from an executive at Foundry Networks, Inc., told a ton of people about them -– sometimes up to fifteen people in one day. "He was a shotgun, firing information out to multiple people," an assistant U.S. attorney said of former financial analyst Matthew Teeple. Talk about a schemer with a big mouth. A judge recently sentenced Teeple to five years in prison and fined him $653,890.
 
Don’t illegally trade shares on your baby-mama’s account
This tip seems pretty basic, but it didn’t stop an investment banker from doing this very thing. In February 2014, the SEC charged NYC investment banker Frank “Perk” Hixon, Jr. with insider trading of nearly $1 million. He traded under both his father’s name and his former mistress’s name, Destiny Robinson. At first, Perk denied knowing either Destiny or his father, but later, he relented, saying he used the insider trading profits as child support for his and Destiny’s love child. In August 2014, a court sentenced Perk to 30 months in prison and charged him nearly $2 million in forfeitures, restitution, and fines. 
 
Don’t use your work computer to access confidential information
According to the SEC complaint, Zachary Zwerko and David Post, buddies from business school, carried out some Scooby Doo-type cover up to hide the insider trading scheme they’d hatched. Zwerko handed Post insider information. They used burn phones and encoded email messages with a dummy email account to contact each other. Zwerko picked up his cash payment for the insider tips in shoeboxes at Post’s 2012 Halloween party, and the pair illicitly reaped $722,000 in profits. With this level of care, you’d think Zwerko would be smart enough NOT to access the non-public information with his work computer. The SEC noticed Post’s large and unusual trades and then traced the information leak back to Zwerko, whose work computer showed that he had accessed the confidential information prior to contacting Post. Both men pled guilty.  
 
Don’t trade on inside information RE: the worst oil disaster in US history
Insider traders don’t make the best life decisions, but Keith Seilhan is an especially terrible human being
 
As incident commander of the 2010 Deepwater Horizon oil spill in the Gulf of New Mexico, Seilhan learned insider information, including that “initial oil flow estimates … were significantly greater than the public estimate of 5,000 barrels per day.  Indeed, those private estimates were between 52,700 and 62,200 barrels per day – a 10x increase than that provided to the public,” according to Forbes
 
Seilhan sold his portfolio of BP shares before the real impact of the spill became public. After Seilhan sold his shares, BP revealed the real numbers from the oil spill. The company’s stock price plummeted, and Seilhan avoided $100,000 in losses. Talk about blood money. The well’s explosion dumped 170 million gallons of oil into the Gulf, killed eleven humans, and killed or injured nearly 8,000 animals.
 
Maybe later, when we’re done insider trading and avoiding losses on the worst oil disaster in US history, we can go kick some kittens. According to Forbes, Seilhan agreed to pay more than $220,000 in reparations, interest, and civil penalties. 
 
What have we learned from these stories? Nothing. Insider trading never pays, and in the end, you’re going to get caught. Even if you use a burn phone. Even if you eat the evidence. 
 
These are facts, people. Facts. Seriously, don’t do it… unless you have a REALLY good escape plan.1
 
1 Not legal advice. Don’t do it.

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