The One About Nothing

Goldman, Morgan Stanley win dismissal of lawsuits over Archegos collapse

A U.S. judge on Thursday dismissed seven lawsuits by investors who accused Goldman Sachs Group Inc and Morgan Stanley of misconduct that fueled the rapid March 2021 collapse of Bill Hwang’s $36 billion firm Archegos Capital Management.

U.S. District Judge Jed Rakoff in Manhattan dismissed the investors’ market manipulation and insider trading claims with prejudice, meaning they cannot be brought again.

Legal Risk and Insider Trading

… Specifically, do illegally informed traders rationally internalize legal risks? If so, is this process reflected in their trades and prices? While addressing these issues is vital to assess insider trading regulations’ effectiveness, one faces a formidable empirical challenge: neither private information nor legal risks are readily observable.

To enhance our understanding, we contribute in three ways:

1. We manually collect data on individual trades and the resulting legal outcomes from 530 illegal trading investigations prosecuted by the SEC. We characterize over 6,500 trades in 975 firms from 1995 to 2018, representing many assets and market conditions. We examine the information sets, timing, quantity traded, and penalties of illegal insiders.

2. To benchmark the impact of legal risks on trading, we develop a stylized equilibrium framework of informed trading featuring an insider who internalizes his own trades’ effect on prices, the probability of being prosecuted by a regulator, and the conditional value of a legal fine.

3. We exploit two plausibly exogenous sources of variation in legal risk exposure to test the model’s predictions. Controlling for various behavioral predictors, we provide consistent evidence that legal risk deters insider trading.

Memes, Pumps, Blunders: Absurd Crypto Spectacles Make a Comeback

A website called pump.fun allows anyone to create a memecoin through an automated process. Simply enter a name, an introductory description and an image that represents the token. Others browsing the website can “ape” – crypto slang for buying without doing much research – into whatever memecoins they like.

Spending just a few minutes on the website is mesmerizing, with dozens of new memecoins created — and swiftly pumped in value by traders. There are tokens like BoomerCoin. (Ticker: BOOMER; description: “Sell and Grandma dies.”) among memecoins in almost any pop-culture, or crypto-culture category one can imagine. There’s even one mocking a caricature of a risk-adverse traditional-finance worker named Jared, with the description: “memecoins? Sounds too risky, I will never touch them.”

Binance Executives File Suit Against Nigeria: Local Media

The two Binance executives who have been held as guests of the Nigerian government since arriving in the country in February, have sued the National Security Adviser, Nuhu Ribadu, and the Economic Financial Crimes Commission for violating their fundamental human rights, local media reported Friday.

In separate filings, Tigran Gambaryan, head of financial crime compliance at the world’s largest crypto exchange, and Nadeem Anjarwalla, regional manager for Africa, urged the Federal High Court in Abuja to order the agencies to release them, return their passports and issue a public apology, Leadership reported, citing the government-owned News Agency of Nigeria.

Ericsson Says U.S.-Imposed Monitor Has OK’d Its Anticorruption Program

Ericsson said a U.S.-imposed compliance monitor has certified that its anticorruption program is working, a crucial step for the telecommunications company to emerge from the close Justice Department scrutiny it has been under since it admitted to bribery in 2019.

On Thursday, Ericsson said it expects to emerge from its independent monitorship no later than June 2. The monitor said Ericsson’s anticorruption compliance program has “satisfied requirements and is functioning effectively,” according to the company.

Stockholm-based Ericsson was put under a monitor’s observation after entering into a more than $1 billion settlement with prosecutors in 2019 over a bribery scheme that ran from 2000 to 2016 and involved the company’s operations in Djibouti, China, Vietnam, Kuwait and Indonesia.