1. Albert Wiggin- In the 1920s Wiggin was the Chairman of Chase National Bank, at the time the second largest bank in the country. During the Bull market of early 1929 Wiggin purchased shares of Chase and set up six different shell companies to mask his profits. Amazingly, he even paid for the holding by borrowing from Chase itself. After the market peaked, Wiggin began aggressively short selling his own stock, profiting from his own company’s decline. Eventually, he netted profits in excess of $4 million, equivalent of over $50 million in today’s dollars, and then evaded paying taxes by keeping his holdings offshore. Eventually he was sued by a group of shareholders to the tune of $2 million and ultimately ousted. , Wiggin was never tried criminally charged because his actions were legal during his time.
2. Dennis Levine, Ivan Boesky and Michael Milken were all co-conspirators in a a series of insider trading scandals in the 1980s. Levine was the managing director of Drexel Burnham Lambert, a major Wall Street investment bank specializing in the junk bond market. During his time at Drexel, Levine partnered with Ivan Boesky, a stock trader who bet on corporate takeovers. Levine passed on insider information to Boesky who would then profit from it. Levine was allegedly paid more than $2 million for his tips, while Boesky profited in excess of $50 million. In 1986, the SEC charged Levine with insider trading. In a plea agreement, he implicated Boesky and received three years in prison and $100 million in fines. Similarly, Boesky also cooperated with the SEC, implicating Michael Milken, head of Drexel’s high-yield bond department. Boesky received a sentence of three years in prison and a fine of $100 million. Milken was sentenced to two years in prison, $200 million in fines, and $400 million in restitution to stockowners. All three men were banned from working in securities ever again.
3. Raj Rajaratnam, Anil Kumar and Rajat Gupta- In what is considered to be the largest hedge fund insider trading case in U.S. history, these three friends were all indicted by the SEC for insider trading starting in late 2009. The charges stem from tips given to Rajaratnam, founder and owner of Galleon Group, a hedge fund. He allegedly profited from tips received from Kumar and Gupata, both senior executives at McKinsey & Company Consulting, as well as from Robert Moffat, a senior executive at IBM.
Kumar and Gupta allegedly used their position as consultants for a number of prominent corporations to tip off Rajaratnam, who profited by more than $60 million from inside information. In December 2009, Kumar pled guilty to insider trading. Star witness in the SEC’s action against Rajaratnam, he received a fine of $2.8 million, the amount he had received for his tips. Rajaratnam was found guilty on all charges against him and was sentenced to 11 years in prison, the longest ever for an insider trading case. On October 26, 2011, the USAO filed criminal charges against Gupta for insider trading. His trial is still ongoing.
4. Jeffrey Skilling- In 2006, the former CEO of Enron Corporation was convicted of insider trading along with a whole host of other white-collar crimes, including fraud and conspiracy. Skilling allegedly dumped $60 million in Enron stock two months before the company declared bankruptcy. Skilling was sentenced to 24 years in prison and fined $180 million.
5. Martha Stewart and Samuel Waksal- In December 2001, ImClone Systems, a biotech company run by Sam Waksal, was about to implode. It had failed to get hoped-for FDA approval regarding an experimental antibody drug, Erbitux. Waksal alerted family and friends to sell their stock. Advised by her broker Peter Bacanovic of Merrill Lynch, Stewart jumped at the opportunity to sell her own 3,928 shares. In 2002 Waksal was arrested on insider trading charges; that same year he pleaded guilty to charges of securities fraud, bank fraud, obstruction of justice, and perjury. Indicted on counts including securities fraud and obstruction of justice, in 2004 a jury convicted Stewart and her broker on four counts each of making false statements related to the sale of ImClone stock. Two years later, the drug was approved by the FDA.