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 &#x201C;another cooperator.&#x201D; 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 &#x201C;a massive circle of friends existed on Wall Street . . . mainly at some of Wall Street&#x2019;s biggest trading outfits, known as hedge funds who were using and trading on insider information.&#x201D; Gasparino tracks the government&#x2019;s successes, failures, and work in progress, with major violators such as Raj Rajaratnam jailed while the &#x201C;white whale of Stamford&#x201D; continues in their sights. He concludes that &#x201C;no one who studies the markets and financial systems has any doubt . . . they will repeat the same practices that led to the 2008 collapse.&#x201D; Very informative. --Mary Whaley