Circle of Friends: The Massive Federal Crackdown on Insider Trading---and Why the Markets Always Work Against the Little Guy
Gasparino describes the involvement of government officials in insider-trading investigations up to early 2013. He begins in mid-2007, when we meet a little-known but successful trader who is told by the FBI that he faces jail unless he confesses and helps the government catch others. Often suspects are identified by “another cooperator.” The author weaves his tale like a novel, except it is a well-researched account of events using interviews, names, and dates. Instead of small firms, the FBI became convinced that “a massive circle of friends existed on Wall Street . . . mainly at some of Wall Street’s biggest trading outfits, known as hedge funds who were using and trading on insider information.” Gasparino tracks the government’s successes, failures, and work in progress, with major violators such as Raj Rajaratnam jailed while the “white whale of Stamford” continues in their sights. He concludes that “no one who studies the markets and financial systems has any doubt . . . they will repeat the same practices that led to the 2008 collapse.” Very informative. --Mary Whaley