INSIDER-TRADING prosecutions usually revolve around whether information is illegally obtained and then, knowingly and profitability, traded on. On July 19th America’s Securities and Exchange Commission (SEC) used a novel approach to charge Steven Cohen, boss of SAC Capital, one of world’s most successful hedge funds. The agency asserts he should have known that two of his employees had illegally obtained information (which turned out to be worth $275m, through trading profits and avoided losses) and then failed to supervise them sufficiently to discourage violations of the law. Whether this argument flies in court is an open question. The SEC’s move suggests that, after an extensive investigation, it had not collected strong enough evidence to directly accuse Mr Cohen of insider trading and chose to opt for an alternative charge rather than drop the case. More on The Economist [...]

Rajat Gupta, the former Goldman Sachs Group Inc. director who was found guilty of passing confidential tips to jailed billionaire hedge-fund manager Raj Rajaratnam, was ordered to pay $13.9 million in a related U.S. regulatory lawsuit. Gupta, 64, was also permanently barred from acting as an officer or director of a public company and from associating with any broker or investment adviser, the Securities and Exchange Commission said yesterday, citing an order by U.S. District Judge Jed Rakoff in Manhattan. More on Bloomberg [...]

If performance-chasing has been a problem in mutual-fund investing, Andrew Altfest warns, just wait until hedge funds start flashing ads. Mr. Altfest, executive vice president at Altfest Personal Wealth Management in New York, is one of many financial advisers worried that a recent regulatory change allowing hedge funds to advertise will sway clients and other investors. That’s likely to make advisers’ jobs harder. More in the Wall Street Journal [...]

During the financial crisis, while Dr. Evil-ish Wall Street villains like Goldman and Lehman Brothers were getting all the bad press, pundits continually referred to J.P. Morgan Chase as the “good bank.” The myth of Chase as the finance sector’s one upstanding rock of rectitude reached its zenith in July of 2009 with an embarrassingly hagiographic piece in the New York Times entitled, “In Washington, One Bank Chief Still Holds Sway.” In that one, the paper breathlessly praised Jamie Dimon for emerging from “the disgrace of his industry” to become Barack Obama’s “favorite banker.” Chase and Jamie Dimon kept that rep for a good long time. As late as 2011, Dimon’s name was being floated around Washington very seriously as a potential replacement for Tim Geithner’s Treasury Secretary post. Even when Dimon showed up on the Hill last year to testify (read: obfuscate) about the infamous “London Whale” episode, Senators on the banking committee – who, as writer George Zornick noted, had collected a cumulative $522,088 in donations from Chase – slobbered all over Dimon and shelved the important London Whale matter to ask the great genius’s advice on how to fix the economy. More in Rolling Stone [...]

Q: If one is rolling over a 401(k) into an IRA and the amount of money is over $500,000, should the money be divided up between institutions to be covered by insurance, should the institution go under? Fidelity says that all amounts over that are covered by an insurance policy by Lloyds of London. Is that sufficient or should the money be rolled into two or three IRAs at different companies? More in the Sacramento Bee [...]