Political Perks: Evidence of Insider Trading in Washington

When it comes to insider trading cases, probably none have been as big as the recent conviction of the billionaire Raj Rajaratnam, former hedge fund manager and founder of Galleon Group. (See our prior posts on Rajaratnam here.)

Rajaratnam had a huge web of contacts that fed him with insider information which he then traded on to make billions and to obtain abnormal returns for investors in his hedge funds. His case has been hailed as a huge victory for the US Justice Department in an effort to crack down on what is believed by some to be a widespread problem in our capital markets.

There is now evidence suggesting that the Justice Department may not need to look so far from Capital Hill to find rampant insider trading. A new study...

Lance Armstrong Investigation: More Evidence Coming Out

Several news sources are reporting today that the head of the Swiss lab that was involved in testing Lance Armstrong's urine during the 2001 Tour of Switzerland, Martial Saugy, has confirmed that he did meet with both Lance and his manager, Johan Bruyneel.

This is consistent with the story that Tyler Hamilton and Floyd Landis have told regarding Lance having a positive test for EPO in the 2001 Tour of Switzerland. However, details of the meeting as told by Saugy, if correct, show that Hamilton's understanding was mistaken in some respects. Here is Saugy's story:

Lance Armstrong Investigation: Latest News

It sounds like Jeffrey Novizky's investigation of Lance Armstrong will probably be in the news quite a bit over the summer as the Grand Jury is likely to indict Lance. This news comes from Lance's home town newspaper, The Statesman, which quotes several "legal experts" on the case. Here are some quotes from the article:

Lance Armstrong Investigation: Bill Strickland Talks Again

CBS News is reporting that Bill Strickland, editor of Bicycling Magazine was on "The Early Show" today and commented on the latest news about Lance Armstrong. According to the report Strickland said that " he has evidence that Armstrong had used drugs."

We have known since April that Strickland believes Lance doped. However, in this report it appears that Strickland has evidence to support his belief that he has not before revealed. From the report, it sounds like Strickland discovered evidence of Lance's alleged failed test in the Tour of Switzerland. In particular, it's being reported that Strickland said the following:

(Strickland) told co-anchor Chris Wragge, "I wrote a story in May for Bicycling ... that said I thought he was guilty, I knew he had doped. In the course of investigating around him, I finally found the conviction. So I've known for awhile. This is just inevitable, I think."

This statement was made in the context of the claim first made by Floyd Landis and later by Tyler Hamilton that Lance failed a doping test in the 2001 Tour of Switzerland. Both Landis and Hamilton claim that Lance was able to hide that test through cooperation with the UCI and the Swiss drug lab that found the result.

Hopefully, more of what Strickland was referring to will come out soon...

Lance Armstrong Investigation: What I Learned from 60 Minutes

I watched three 60 Minutes videos about the Lance Armstrong investigation, including a segment on 60 Minutes Overtime. In these videos, Tyler Hamilton states that the claims he made on 60 Minutes are what he told the Grand Jury that is investigating Lance Armstrong for his use of performance enhancing drugs while racing on the U.S. Postal Team. Here are a few claims made by Tyler and other takeaways from the videos:

Lance Armstrong Investigation: George Hincapie's Response

CBS News reported yesterday that when Jeffrey Novitzky's investigation brought Lance Armstrong's number one lieutenant and close friend, George Hincapie, in to testify, that Hincapie confirmed that Lance had doped by using EPO and testosterone. Here is the quote from the CBS website where you can read about it and also watch a video that was shown on the news yesterday:

Lance Armstrong Investigation: George Hincapie Adds His Witness that Lance Doped

An incredibly credible witness add his testimony to Floyd Landis and Tyler Hamilton. Prior to today, we had Tyler and Floyd as eye witnesses to Lance's doping. These two will probably not even be on the witness stand in a case brought against Lance since the jury will have to hear hours of testimony where these two have lied vehemently in the past about their own personal doping.

However, anyone who knows cycling would say that the biggest witness against Lance would be his top lieutenant, George Hincapie. George has never failed a drug test and was on Lance's team every year that Lance won the Tour de France. So, if George testified, as is being reported by VeloNation, that he saw Lance doping, then anyone who is still holding out hope that Lance was clean should have no doubts that he doped now. This is at least the fourth teammate who has testified against Lance, if you include Frankie Andreu. Frankie had some comments about todays news too.VeloNews reported that Frankie had the following to say:

Lance Armstrong Investigation: Tyler Hamilton Returns Olympic Gold

Now that Tyler Hamilton has publicly stated that he has personal knowledge of Lance Armstrong doping, some of the question people are asking are as follows:

1. Is Hamilton lying again or is this finally the truth?
2. Can Hamilton be put in jail for admitting to doping?
3. What motives might there be for Hamilton to make these claims?

These are valid questions that will undoubtedly be brought up if Jeffrey Novitzky's investigation of Lance Armstrong ever gets out of the Grand Jury. However, today we saw at least one consequence for Hamilton....

Lance Armstrong Investigation: Tyler Hamilton Spills the Beans

The news broke today that CBS's 60 Minutes has been conducting a six-month investigation of doping in cycling. The full program will be aired this Sunday. For now, the link above has a short part of Tyler's interview. They interviewed Tyler Hamilton and Frankie Andreu and, undoubtedly, others. We probably already knew what Frankie would say but Tyler is shown telling 60 Minutes host, Scott Peller, that he saw Lance "inject (EPO) more than one time." As quoted on VeloNation

Doping in Cycling: McQuaid Wants Former Dopers Out of Management

VeloNation is reporting that Pat McQuaid, President of the UCI, has proposed that any rider who has been caught doping should be banned from later taking a position managing a cycling team.  The rationale for McQuaids proposal is based on the following premise:

EPO and the Amgen Tour of California (A Flashback)

As I read in the news that yesterday's first stage of the Amgen Tour of California was cancelled due to snow, I thought back to last year when I blogged about the irony in the name of America's number one stage race. That's right, this is America's "Tour de France" so to speak. I thought it might be fitting to comment again on this irony since the race has retained the name of the marketer of the most abused drug in cycling in it's title: Amgen. The rest of this short post is a flashback from last May 31, 2010:

Raj Rajaratnam Conviction

Posting to Blogger was down for over 24 hours, so this is a bit delayed.  Two days ago, Galleon Group founder Raj Rajaratnam was convicted of 14 counts of securities fraud and conspiracy.  One of the things that stands out to me about this case is the breadth of Rajaratnam’s insider trading network.  The WSJ has an interactive graphic that maps out Rajaratnam’s network, and seeing the number of people involved in the network blows me away. 

 

Remember, this isn't a diagram of Rajaratnam's golfing buddies--these are people who have at least been accused of passing on insider information.  More than anything, seeing such a network makes it hard for me to believe that this is an isolated incident.  Indeed, current trends suggest that we are just starting to see how pervasive insider trading really is.  According to the WSJ:

Lance Armstrong Investigation: Leaks About Scope

Several news articles are reporting that Jeffrey Novitzky's investigation into doping and fraud related to Lance Armstrong has led to a formal request from U.S. authorities for assistance by foreign prosecutors. This leak is being attributed to about a half-dozen people who are supposedly familiar with the case but requested anonymity and who were interviewed by AP reporters in the U.S. and Europe. According to these sources, the request was in the works since late 2010 but has been formalized in the past month. It's also being reported that the "evidence request specifically targets U.S. Postal and mentions Armstrong by name."

While this news about a formal request, in itself, is interesting in that it shows progress is still being made, it isn't very surprising to me. It was previously reported that Novitzky's team went to France late last year and met with officials from France, Belgium and Italy and that the officials said they would help with the investigation. However, some other information is being reported in these articles that, if true, I find more interesting. For example...

Lance Armstrong Investigation: Will Perjury Charges Stick?

As soon as Jeffrey Novitzky started his investigation against Lance Armstrong, conventional wisdom has been that Novitzky's strategy will be to get Lance convicted on perjury. This is how he convicted other top athletes, such as Marion Jones, who were found to have perjured themselves in the Balco investigation.

Today, I read a very interesting transcript of a live chat with the author of the book: "Tangled Webs: How False Statements Are Undermining America From Martha Stewart to Bernie Madoff." The author, James B. Stewart, considers four fraudsters and their obvious perjuries including: Martha Stewart, Bernie Madoff, Barry Bonds and Lewis "Scooter" Libby. Here are some of the points that came out of the chat that suggest Novitzky has his work cut out for him when it comes to making a perjury charge stick:

Lance Armstrong Investigation: News About and From Floyd Landis

You might have heard that Floyd Landis is being sued in Switzerland by the Pat McQuaid, Hein Verbruggen and the UCI regarding his statements that former and past leadership of the UCI have been corrupt. This is similar to a lawsuit filed by the UCI against the former head of the WADA, Dick Pound that was dismissed a year ago when Pound made a vague statement that allowed the UCI to bow out without losing too much face.

An analysis of the Landis lawsuit on VeloNews suggests that the UCI really will get very little from this lawsuit even if they win it. In the end, the article provides this conclusion:

As one attorney looking at the case noted, “it looks like a PR move on the part of the UCI, one where they pull out all of their resources to try and shut someone up. I doubt it will go anywhere, though.”  

In response to the UCI's apparent PR move, VeloNews is reporting that Floyd Landis has stated that he plans to vigorously defend his statements. Apparently, he has a law firm willing to represent him. In addition, he sent an email to VeloNews that has some insightful statements that I've copied below...