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Suspicious Wall Street trading draws FBI attention

The Federal Bureau of Investigation (FBI) is currently investigating alleged insider trading regarding the $23 billion purchase of H.J. Heinz. The purpose behind the FBI's investigation is to determine whether or not a felony was committed, and if so, who was responsible.

The trades in question occurred just before the acquisition of H.J. Heinz, which sent the company's stock prices sky high. The trades consisted of 2,533 options bought through a Swiss account at Goldman Sachs, right before Berkshire Hathaway and 3G Capital Management announced the deal for Heinz. In response, the Securities Exchange Commission (SEC) froze the account. The FBI must first determine whether or not a crime was committed, and then determine the identity of the perpetrators. This may be difficult, because some accounts allow customers to hide their identity, and some jurisdictions protect the confidentiality of financial traders. This means that the investigation could hit a brick wall.

Insider trading involves someone with inside information about a company or investment trading on that information in violation of a duty or obligation. It is considered a form of securities fraud, because the trader is in effect gaining an unfair advantage over other traders by using inside information about the company/investment.

This case illustrates how difficult it can be to prosecute white collar crime. It is unclear whether any offense has been committed, but assuming that one has, law enforcement has to track the identity of the traders, which may be protected under an account's confidentiality policy. Because of this, it may not be possible to bring the perpetrators to justice. Another factor is the cooperation of the financial and law enforcement authorities in the traders' jurisdictions; if there are policies in place to protect their identity, then bringing them to justice will be impossible.

Anyone accused of a white collar crime is entitled to a vigorous criminal defense and is entitled to a presumption of innocence before proven guilty beyond a reasonable doubt. They are entitled to question witnesses, challenge the admissibility of any evidence, and challenge the constitutionality of the court's charges. As a result, anyone accused of white collar crime has the legal and constitutional right to fight for their freedom.

Source: DealBook, "Heinz Trades Draw FBI Scrutiny," William Alden, Feb. 20, 2013

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