Return to The Den of Thieves?

The SEC and DOJ have been waging a renewed and reinvigorated battle on insider trading, bringing more high profile cases this year than perhaps since the late 1980s.  Indeed, many have described the Guttenberg litigation (discussed hereas perhaps the most important since the days of the 1980s.  Then, a group of Wall Street traders whose exploits are chronicled in James Stewart’s book, Den of Thieves became the targets of a well publicized-string of enforcement actions which landed many in jail. 

The campaign being waged today appears no different than the one from the 1980s, focusing on a number of Wall Street professionals.  Consider for example the following cases:

SEC v. Guttenberg, Case No. 1:07-cv-01774 (S.D.N.Y. Filed March 1, 2007), and the related criminal cases which involve UBS representatives, a Morgan Stanley attorney, a Lyford Cay hedge fund manager, and other Wall Street professionals;

SEC v, Barclays Bank, Civil Action No. 07-cv-04427 (S.D.N.Y. Filed May 30, 2007), brought against a major bank and one of its senior officers; and

SEC v. Joseph A. Frohua, Civil Action No. 07-C-0702 (E.D. Wis. Filed August 1, 2007), filed against a fund manager.

The common theme to these cases is insider trading allegations against Wall Street professionals – just like Den of Thieves.  Some say these cases stem from the fact that the current generation of Wall Street traders is too young to remember the prior wave of prosecutions on Wall Street. 

An interesting theory.  But then consider the most recent case – SEC v. Gregg Ashley Smith, Civil Action No. 07-CV08394 (Filed September 27, 2007) which was brought against two securities professionals (previously discussed here).  Defendant Ashley Smith, age 37, perhaps does not recall the prior round of cases.  Codefendant and father of the first defendant, Elliot Joel Smith, at age 75 surely, however must remember those celebrated cases.  If so, then what accounts for this apparent return to Mr. Stewart’s Den of Thieves?  Perhaps it is simpler than lack of memory.  Perhaps Gordon Gekko in the movie Wall Street got it right.