Former Galleon Trader: "If I Got This Call Every Day, I’d Be A Great Trader, Too." (FRONTLINE's 'To Catch a Trader')

Watch Frontline's 'To Catch A Trader' documentary below. I added more quotes from the former Galleon Group trader and from Steven Cohen's deposition (head of SAC Capital).

STEVEN COHEN: The way I understand the rules on trading on inside information, it’s very vague.

MICHAEL J. BOWE, Plaintiff’s Attorney: Are you familiar with Rule 10b5-1?

STEVEN COHEN: No. No, not— that— you’d have to explain it to me.

NARRATOR: Rule 10b5-1 is the Securities and Exchange Commission’s principal regulation prohibiting insider trading. It states that no trades can be made on the basis of what is called “material non-public information”— proprietary information that can move a company’s stock.

MICHAEL J. BOWE: Do you have an understanding about whether, when in possession of material non-public information, you’re ever allowed to trade in a security?

STEVEN COHEN: You know, that’s not the way it’s explained to me. The way I understand the law is that it’s very vague, so it’s an interpretation of the law.

TURNEY DUFF, Author, The Buy Side: You’re constantly trying to get edge. If you have edge, that means there’s a reason that you know, that no one else does, legal or illegal, to buy the stock.

NARRATOR: Turney Duff worked at The Galleon Group, a hedge fund made famous by its founder and CEO, Raj Rajaratnam.

TURNEY DUFF: It’s all about getting information. They call it trading stocks, but it’s really trading information. Like, that’s what we were doing. So you were constantly trying to make contacts of people who could help you make more money.

NARRATOR: But Turney Duff remembers getting a hint of what was really going on at Galleon one day while manning the phones in Rajaratnam’s absence.

TURNEY DUFF: I remember sitting there on the desk one day, and Raj Rajaratnam was out. And the phone rings and I’m, like, “Galleon,” and the guy’s whispering or something. And I’m, like, “Hello? Galleon.” And he’s, like, “Is Raj there?” I’m, like, “No.” And so he’s like “Hm.” He’s, like, “Jefferies is going to upgrade Amazon in six minutes”— click.

And so I’m sitting there and I’m, like, “Oh, my God, what do I do?” Like, because if I don’t buy Amazon and the stock’s upgraded and the stock goes up, they’re going to find out. But if I do it, you know, isn’t this illegal? What should I do?

And so I sat there for five minutes, sort of trying to— to make a decision. And— and I ultimately ended up buying 100,000 shares of Amazon. Thirty seconds later, I made about a half a million dollars. And I remember sitting there saying, “Wow.” I’m, like, “If I got this call every day, I’d be a great trader, too.” “OK, you know, I need my own Mr. Whisper.”

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