insider trading and market manipulation: detection - FINREP

INSIDER TRADING: CASE STUDY 2(detected through use of illegal drugs)• MARISSA BARIDAS: NYSE Referred 6 merger deals exhibiting same Investment Bankerand same Accounts trading in all 6 merger deals (no source identified)• NYSE investigator read in the NY Times that an individual was arrested and uncovered aninsider trading network identifying the accounts referred and 5 stocks; 3 of which NYSEhad referred to the SEC• NYSE investigator recognized some of the accounts mentioned in the NY Times article asthose having been referred to the SEC• OUTCOME:- Baridas was the Control Room person at the Investment Banker involved in the 6deals- The individual mentioned in the NY Times as having been arrested was Baridasboyfriend- Baridas tipped her boyfriend who in turn tipped others; the Manhattan District Attorneyfound out about the insider trading scheme when they taped recorded the boyfriend resultingfrom a drug dealing investigation and had the boyfriend cooperate by having him wear a wirewhen speaking with Baridas about how she obtained her information- First case in the State of NY declaring insider trading to be Grand larceny: Baridassentenced to jail; and her boyfriend sent to jail for the drug conviction at a reduced sentencefor cooperating5MARKET MANIPULATION: CASE 1(at the close of trading)• D. MEMMOT AND BRIAN RIGNEY: With the last sale in XYZ stock atUSD8.95, Memmot, a broker approved a customer facilitation for a blockof XYZ stock of approximately 4.8 million shares of XYZ at a price ofUSD9.00• Memmot purchased about 2.8 million shares for his firm’s ProprietaryAccount in the facilitation• Following the customer facilitation, the price of XYZ began to declineand Memmot directed his trader Rigney to buy the stock and close it atUSD9.00• REGULATORY ACTION BY THE NYSE: MEMMOT CENSURED,SUSPENDED FOR 6 WEEKS AND OREDERED TO PAY USD100,000;RIGNEY CENSURED AND ORDERED TO PAY USD75,0006