2011 Corporate Scandals In Review: Wall Street Full Of Dreams, Schemes
Scandals and court cases were not absent from the financial world in 2011, as several prominent business leaders fell under investigation. NY1's Diane King filed the following report.
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Early this spring, Raj Rajaratnam first faced the music in federal court, in what shortly became the biggest insider trading case in history. Prosecutors charged Rajaratnam, the Galleon Group hedge fund manager, with making at least $50 million via illegal stock tips.
A jury agreed and in May found the now former hedge fund titan guilty on all 14 counts of conspiracy to commit fraud and securities fraud.
In October, Rajaratnam was sentenced to an unprecedented 11 years in prison.
"The Justice Department was clearly looking to send a message that insider trading was not going to be condoned, was not going to be permitted, and that we were in a new era of enforcement," said Marc LoPresti, a partner of Tagliaferro & LoPresti.
Late in 2011, the mighty money-makers continued to fall, as MF Global filed for bankruptcy on Halloween, leaving in its wake some $1.2 billion in missing client funds.
Former MF Global CEO Jon Corzine simply could not account for missing assets when called before his one-time Congressional peers.
"I simply do not know where the money is," he testified. "I ultimately had overall responsibility for the firm. I did not, however, generally involve myself in the mechanics of the clearing or settlement of trades or in the movement of cash and collateral."
Corzine, a former New Jersey senator, governor and CEO of Goldman Sachs, is alleged to have received special treatment by his firm's regulator, the Commodities Futures Trading Commission.
One of the five commissioners for the agency Bart Chilton, said the investigation is ongoing.
"Look, if somebody has violated the law and not just with regard to MF Global, we're going to go after them 24/7, 365. That's our job," said Chilton. "We've got an idea of the types of places it went, but I can't talk about it right now,"
Another pot of gold went missing this year at Swiss bank UBS, when a rogue trader was blamed for a $2.3 billion unauthorized transaction.
Kweku Adoboli is charged with being at the center of the UBS malfeasance and his case is being put on hold until January.