I have seen him and his administrative assistant (head of equity sales and trading, head of equity sales and trading of American branch of Ruilian Bank) from a distance (American branch of Ruilian Bank has the largest banking trading hall in the world, which is bigger than a football field and four stories high). I'm at the same level, but more senior) to discuss something together.

Their body language shows contempt and disdain.

Curious, I went over and asked what was going on.

It turned out that a nearby hedge fund named SAC Capital (named after its boss Steven A. Cohen) invited my boss to "talk about business", but he knew what SAC's business was like, so he only sent his assistant to the appointment, and the man just came back to report.

At that time, I was still young and didn't know much about the inside story of Wall Street, even about SAC Capital, so I asked my boss to explain it in detail.

It turns out that SAC is one of the most profitable hedge funds on Wall Street, and its specialty lies in inside information.

Insider information is generally trying to buy off the middle-level executives of large companies and receive the news of financial statements or asset restructuring a few days in advance; In this respect, the nearby SAC and Galleon are big families.

But Steven Cohen felt that he didn't earn enough, so he put his mind on another kind of inside information, that is, pension funds and mutual funds place orders in the stock market through big banks every day.

The assets of pension funds and mutual funds in the United States are generally hundreds of billions of dollars, and the orders are usually hundreds of millions or even billions. Of course, it is impossible to close the business immediately. It takes at least a day, and sometimes it takes more than a week to complete if you are careful not to disturb the market.

As long as SAC receives the news when it just placed the order, it can run ahead (this is called running ahead), buy a lot of stocks first, and then wait for the real big order to push up the price, so as to make a steady profit.

However, pension funds and * * * mutual funds (known as "buyers" and "buyers" in the industry) specialize in preventing large bills from being withdrawn in advance, so the internal management is very strict and it is not easy to buy off their employees, so Cohen came up with a plan:

Since these orders will eventually be handed over to the trading department of the bank (known as the "seller" and "seller" in the industry), it is the same from there.

Cohen doesn't have to buy off bank employees. He directly contacted the directors of the bank's stock exchange and invited them to "invest" in the shares of SAC Fund.

These insider trading funds make steady profits free of charge, and the annual rate of return is above 100%; Cohen gets half of the profits and investors get the other half, which is still more than 10 times higher than the average return of the same fund of less than 5% a year.

Everyone winked at each other and called SAC to chat, when a big list came in. In this way, Cohen doesn't have to risk leaving evidence to pay for the news, and he doesn't have to worry about the lack of motivation of the source, because every phone call automatically represents tens of millions of dollars in profits.

As far as I know, my boss was the only stock trading supervisor among all the big banks in the United States at that time who refused to buy shares in SAC's funds.

SAC has lived a comfortable life in the past 20 years, with an average annual income of $4-5 billion (ultimately from small investors behind pension funds and mutual funds). Cohen's personal wealth is said to exceed $20 billion, making him the richest man in Connecticut.

Hedge funds engaged in insider trading such as SAC have been in the limelight for too long and have formed an industrial chain in the United States. Any employee of a listed company who wants to earn extra money can find a special "intermediary consultant" and wait for the price with his inside information.

The SEC, which is responsible for banning insider trading, has no agent at all, and its lawyers are bent on buttering up big banks or funds, hoping to get high salaries from officials to businessmen as soon as possible. How can they waste their time doing such a thankless thing?

This situation didn't change until 2009: an ambitious and idealistic newcomer was promoted to the prosecutor for the Southern District of new york (in charge of new york City and several nearby counties, so he has jurisdiction over financial crimes), and his name is Preet Bharara.

Bharara was born in India, immigrated to New Jersey with her parents and grew up as a Sikh. Before he took office, he worked as an assistant attorney general in Manhattan for five years and was very familiar with the illegal activities on Wall Street. But his predecessor only cared about networking (who later became an executive in a big law firm) and didn't let him catch big fish.

Once he became independent, he immediately took insider trading as one of the main directions of handling cases. For six years, he prosecuted 88 cases in succession, and successfully convicted 87 of them, including the chairman of Galen Fund and members of Goldman Sachs' board of directors, which shocked the entire American financial industry.

His biggest failure was Steven Cohen, because Cohen never left any direct evidence, and his men always acted as white gloves. Balala convicted eight SAC traders in succession, but none of them wanted to be tainted witnesses (Cohen was too rich and the hush money was too attractive). Finally, he reached a settlement with SAC and was fined $400 million.

This is the highest settlement fine in American legal history, but paper accounts for less than 2% of Cohen's property.

Such an impartial bureaucrat, who has moved the cakes of several big chaebols, will fight back after a few years.

However, I thought they would start from Balala's position. I didn't expect these people to talk about business (just business, nothing personal), but they didn't take it as personal, just focused on once and for all, which fundamentally put an end to the possibility that the federal judicial system blocked their financial path.

Their starting point is a trader named Anthony Chiasson, who used to work in SAC, and later started a satellite fund with Cohen's money to continue the old activities of insider trading.

After he was found guilty, he appealed to the Federal Court of Appeal on the grounds that Balala did not find out the process of payment and delivery at first hand, that is, his "friends" in Dell and NVIDIA kindly reminded him;

The appeal judge actually adopted this absurd excuse and set a new precedent, declaring that inside information is not illegal unless the document finds evidence of money transactions.

In this way, Balala or other officials who are interested in handling the case can no longer convict any insider funds, because they have too many means to avoid leaving traces of funds that have changed hands directly, such as "donating money" to "charities" founded and operated by insiders, or making cash transactions or remitting money through banks in the Cayman Islands.

That's not enough. The appeal judge also demanded that it must be proved that every link of inside information dissemination knows that the information is illegal, which is impossible to satisfy in practice. A few people tell a lie casually, and the prosecutor can't help it.

Of course, Balala knew the seriousness of the situation, so she immediately appealed to the Supreme Court. Last week, the Supreme Court decided not to accept it, that is, to accept the precedent of the Court of Appeal.

This is the current rule of law in the United States: the law still exists in name only and the procedures are strictly observed, but in fact any political forces that dare to obstruct the chaebol have been completely castrated.

Obviously, these chaebol are professional criminals, and paper is only a very successful criminal, but they have enough money, and even the Court of Appeal and the Supreme Court will shelter them around the corner and let them continue to search for wealth.

In other words, American courts are for the rich, and the so-called justice and equality are all lies.

About the author: Wang Mengyuan, who grew up in Tainan, graduated from the Department of Physics of Qing University with a master's degree and a doctor's degree in physics from Harvard University, and then transferred to the financial field. He has served as research director of BNP Paribas, manager of UBS Group AG and manager of Swiss trust company, and has now retired. My spare-time interest lies in studying economy, military affairs and history.