Michael A. Kimelman

Last updated

Michael Kimelman
Bornborn circa 1971–1972 [1]
CitizenshipAmerican
Alma mater
Occupation(s)entrepreneur, trader, author, business coach, financial consultant, motivational speaker
Website mikekimelman.com

Michael A. Kimelman is an American entrepreneur, former trader, author, business coach, financial consultant and motivational speaker. [2] [3] [4]

Contents

On 9 November 2009, Kimelman was arrested by the FBI on the charges of "conspiracy to commit insider trading" related to the Galleon Group hedge fund fraud organized by Raj Rajaratnam. He stood two-week trial in the United States District Court for the Southern District of New York. [1] During the trial, Kimelman was offered a plea bargain [5] by the U.S. Attorney Preet Bharara but rejected the proposal [6] and was found guilty of "being a part of an insider trading scheme". [7] [8] On 12 October 2011, Kimelman was sentenced to two and a half years [9] and served 21 months at the minimum security Lewisburg Federal Prison in Pennsylvania. [10]

In 2017, Kimelman published the memoir Confessions of a Wall Street Insider, where he revealed a lot of insider details on the Wall Street lifestyle as well as disorganized U.S. Penitentiary System. [10] [11] [12] [13]

Early life

Michael Kimelman was born into a middle-class family and grew up in Tarzana, Los Angeles, California. [1] In 1989, Kimelman entered Lafayette College in Pennsylvania, where he earned a bachelor's degree in 1993. Continuing his studies at the University of Southern California, he received his Doctoral degree (LL.D.) in law in 1997. [1] Kimelman began his career as a mergers and acquisitions lawyer at Sullivan & Cromwell, a white-shoe law firm headquartered in New York City. [1] [14] After being engaged in legal practice for three years, he became disillusioned with corporate law work and changed his career to trading and finance.

Career

After leaving the law firm in 1999, Kimelman launched a successful career as a proprietary trader. [10] [15] He also worked as an analyst and portfolio manager for a number of hedge funds. During the 2008 financial crisis, Kimelman founded Incremental Capital, [10] a hedge fund with peak portfolio assets of $250 million. [12]

Conviction and imprisonment for insider trading

Kimelman became involved in insider trading network organized by the billionaire and founder of the Galleon Group hedge fund Raj Rajaratnam. In particular, in August 2007 Kimelman allegedly received insider trading tips on the purchase of the 3Com Corporation (now defunct) stock by another trader Zvi Goffer. [7] In 2009, Kimelman was arrested by the FBI and in 2011 he went on two weeks trial on the charges of securities fraud and conspiracy. [12] As a number of sources note, Kimelman was on the edge of the insider trading scheme and less significant actor of the 26-person circle mainly run by Raj Rajaratnam and his Galleon Group hedge fund. [10] [16] [6]

The government prosecutors offered Kimelman a no jail probation plea on condition he pled guilty but Kimelman refused and went on trial, where the jury found him guilty. Kimelman served 21 months out of 30 months imprisonment term and was released in August 2013. During the imprisonment, Kimelman appealed to the United States Court of Appeals for the Second Circuit to vacant his conviction but the court upheld the initial sentence. [7]

Based on the United States Supreme Court's final decision on the U.S. vs. Newman regarding the level of involvement in the insider trading circle, Kimelman and his former partners tried to appeal and have the verdicts overturned but were unsuccessful. [17] [18] [19] [6]

2013–present

After incarceration, Kimelman started a number of enterprises in the healthcare and cryptocurrency fields. He also works as a business coach and motivational speaker frequently appearing on various events, shows and podcasts to talk about his life experience and the book he wrote. [20] [21] [22]

Kimelman is a founding member of the White Collar Support Group, an organization assisting the former white collar imprisoners to accommodate to new life . [23]

In 2017, Kimelman and Charlie Shrem formed Crypto.IQ, a strategic advisory and investment firm in the digital asset space. Kimelman is currently the CEO of Dekryption Advisors, an advisory and investment firm with a focus on healthcare and blockchain companies. [24]

Writing

While still incarcerated, Kimelman began to write a book on the Wall Street lifestyle and the U.S. Criminal Justice System, titled Confessions of a Wall Street Insider: A Cautionary Tale of Rats, Feds, and Banksters. The book was written in form of memoir, where the author shared his views on his past career as a money manager and the institutional bias and incompetence of the U.S. judicial and penitentiary system. [12] [11] In the book, Kimelman especially criticized the US prisons: [25]

"“You hear about the basic fairness of the legal system and then you go through the process and there’s this cognitive dissonance between what you hear your whole life and what you experience. It was an urge, almost a necessity, to put that to paper..." [26]

"From a societal point of view, I learned what an abject disgrace our prison system is (really the entire criminal-justice system). While I get that it's supposed to be punitive, I find it hard to believe that the American public would allow it to exist in its present state if they knew what it was like." [27]

Originally published in March 2017 by Skyhorse Publishing, the book received mostly favorable reviews, ranging from critical acclaim for honest retrospection into personal biography [28] [12] [26] to criticism for not taking responsibility for his own actions. [29]

In June 2022, he co-authored a book entitled Mastering the Basics of Bitcoin and Crypto with co-author Charlie Shrem. [30]

Works

Bibliography

Notable publications

See also

Related Research Articles

<span class="mw-page-title-main">Insider trading</span> Public company stock or securities trading using nonpublic information

Insider trading is the trading of a public company's stock or other securities based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information are illegal. This is because it is seen as unfair to other investors who do not have access to the information, as the investor with insider information could potentially make larger profits than a typical investor could make. The rules governing insider trading are complex and vary significantly from country to country. The extent of enforcement also varies from one country to another. The definition of insider in one jurisdiction can be broad and may cover not only insiders themselves but also any persons related to them, such as brokers, associates, and even family members. A person who becomes aware of non-public information and trades on that basis may be guilty of a crime.

<span class="mw-page-title-main">Rajat Gupta</span> Indian-American business executive (born 1948)

Rajat Kumar Gupta is an Indian-American business executive and convicted felon who, as CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he was convicted for insider trading and spent two years in prison. Gupta was a board member of corporations including Goldman Sachs, Procter & Gamble and American Airlines, as well as an advisor to non-profit organizations such as the Bill & Melinda Gates Foundation and The Global Fund to Fight AIDS, Tuberculosis and Malaria. He is the co-founder of the Indian School of Business, American India Foundation, New Silk Route and Scandent Solutions.

SEC Rule 10b5-1, codified at 17 CFR 240.10b5-1, is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5.

The mosaic theory in finance involves the use of security analyst personnel to gather information about a company or corporation to evaluate and determine its financial stability. In addition to public information available to all investors, securities analysts also have access to non-public information which the vast majority of investors do not possess. Trading based on such non-public information can be considered illegal if the information is also material, as defined by insider trading laws.

Rajakumaran Rajaratnam is a Sri Lankan-American former hedge fund manager and founder of the Galleon Group, a New York-based hedge fund management firm.

<span class="mw-page-title-main">Galleon Group</span>

The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the center of a 2009 insider trading scandal which subsequently led to its fall.

Anil Kumar is an Indian-American former senior partner and director at management consulting firm McKinsey & Company, where he co-founded McKinsey's offices in Silicon Valley and India and created its Internet practice among others. Kumar is additionally the co-founder of the Indian School of Business with Rajat Gupta and the creator of two different kinds of outsourcing. He graduated from IIT Bombay in India, Imperial College in the UK, and The Wharton School in the US.

Rajiv Goel is a former American executive at Intel. He was a managing director in Intel's treasury department and a director of strategic investments at Intel Capital.

<span class="mw-page-title-main">Michael Novogratz</span> American businessman

Michael Edward Novogratz is an American investor, formerly of the investment firm Fortress Investment Group. He is currently CEO of Galaxy Investment Partners which focuses on investments in cryptocurrency.

The Raj Rajaratnam/Galleon Group, Anil Kumar, and Rajat Gupta insider trading cases are parallel and related civil and criminal actions by the U.S. Securities and Exchange Commission and the United States Department of Justice against three friends and business partners: Galleon Group hedge fund founder-owner Raj Rajaratnam and former McKinsey & Company senior executives Anil Kumar and Rajat Gupta. In these proceedings, the men were confronted with insider trading charges: Rajaratnam was convicted, Kumar pleaded guilty and testified as key witness in the criminal trials of Rajaratnam and Gupta, and Gupta was convicted in United States District Court for the Southern District of New York in Manhattan in June 2012.

Nelson Saiers is an American mathematical artist and former hedge fund manager. Before 2014, he worked in finance as a Managing Director at Deutsche Bank AG and as the Chief Investment Officer at Saiers Capital, LLC. In 2014, Saiers left finance to create mathematics-based art.

Rajarengan "Rengan" Rajaratnam is a hedge fund manager. He is the founder of hedge fund Sedna Capital and the younger brother of convicted hedge fund founder Raj Rajaratnam. He was arrested for securities fraud in March 2013. His trial in New York City began in June, 2014 but he was found not guilty by the jury in July 2014.

<span class="mw-page-title-main">Charlie Shrem</span> American entrepreneur

Charles Shrem IV is an American entrepreneur and bitcoin advocate. He co-founded the now-defunct startup company BitInstant, and is a founding member of the Bitcoin Foundation. In 2014 he was sentenced to two years in prison for aiding and abetting the operation of an unlicensed money-transmitting business related to the Silk Road marketplace. He was released from prison in 2016. In 2017, he joined Jaxx and served as its chief operating officer, and founded cryptocurrency advisory CryptoIQ.

Mathew Martoma is an American former hedge fund trader. As a portfolio manager at S.A.C. Capital Advisors, he was accused of generating possibly the largest single insider trading transaction profit in history at a value of $276 million. A jury convicted him, and in November 2014 he began serving a nine-year prison sentence. He was incarcerated at FCI Miami as inmate 01138-104, and released early on 19 July 2021.

Kraken is a United States–based cryptocurrency exchange, founded in 2011. It was one of the first bitcoin exchanges to be listed on Bloomberg Terminal and was valued at US$10.8 billion in mid-2022. The company has been the subject of several regulatory investigations since 2018, and has agreed to cumulative fines of over $30 million.

A cryptocurrency bubble is a phenomenon where the market increasingly considers the going price of cryptocurrency assets to be inflated against their hypothetical value. The history of cryptocurrency has been marked by several speculative bubbles.

BitMEX is a cryptocurrency exchange and derivative trading platform. It is owned and operated by HDR Global Trading Limited, which is registered in the Seychelles.

Visium Asset Management LP was an American multi-strategy hedge fund. It began as a healthcare-focused hedge fund, founded in 2005 by Jacob Gottlieb. Visium controlled investment funds with about $8 billion of assets under management and had 170 employees at its peak in 2016. That year, three of the company's traders were indicted by United States federal authorities for securities fraud. One of the accused employees killed himself days after he was indicted. Visium subsequently liquidated several of its funds and wound down operations.

<i>Uneven Justice: The Plot to Sink Galleon</i> 2021 memoir by Raj Rajaratnam

Uneven Justice: The Plot to Sink Galleon is a memoir by Raj Rajaratnam, founder of the Galleon Group, a New York-based hedge fund management firm now ceased in operation; the book was first published in December, 2021 by Post Hill Press.

Three Arrows Capital was a Singapore-based cryptocurrency hedge fund which was ordered to liquidate on 27 June 2022 by a court in the British Virgin Islands. It was founded in 2012 by Kyle Davies and Su Zhu. The company borrowed billions of dollars to fund its trading, and according to July 2022 bankruptcy filings, faces $3.5 billion in creditors' claims. The fund appears to have lost in excess of $3 billion over 2021 and 2022, making its collapse one of the largest hedge-fund trading losses of all time.

References

  1. 1 2 3 4 5 Lattman, Peter (12 October 2011). "Caught in a Wide Web, a Trader Faces Prison". The New York Times.
  2. Bray, Chad (13 October 2011). "Ex-Trader Kimelman Sentenced in Insider Case". The Wall Street Journal.
  3. "Hedgie says he was wrongfully sent to jail". USA Today.
  4. "Accused inside trader, freed from prison, seeks to void conviction". Reuters. 12 March 2015.
  5. "Blown-up trade". New York Post. 14 June 2011.
  6. 1 2 3 "Why This Inside Trader Wants His Conviction Overturned". Fortune. 9 June 2016.
  7. 1 2 3 Pavlo, Walter (12 March 2015). "Another Convicted Insider Trader Challenges Ruling Based on Newman Decision". Forbes.
  8. "Recent decision could give inside trader a 2nd chance". The New York Post. 12 December 2014.
  9. "U.S. Scores Convictions Three Guilty in Insider-Trading Trial". The Wall Street Journal.
  10. 1 2 3 4 5 Beresin, Andrew (29 March 2017). "'Confessions' Is a Nightmarish Tale of Raw Ambition Gone Awry". The Observer.
  11. 1 2 Confessions of a Wall Street insider : a cautionary tale of rats, feds, and banksters. WorldCat. OCLC   938991798.
  12. 1 2 3 4 5 Teicher, Jordan (15 March 2017). "Mamaroneck hedge fund trader writes 'confessions' in prison". The Journal News.
  13. "Martin Shkreli had enemies before his price-jacking days". New York Post. 26 March 2017.
  14. "Alleged Insider Trader Michael Kimelman Is A Former Sullivan & Cromwell Associate". Business Insider.
  15. "Prop Shop Terminology". Investopedia.
  16. "Ex-trader fights US to regain reputation". The New York Post. 13 March 2015.
  17. Whitehouse, Kaja (15 October 2015). "Supreme Court lets insider trading reversal stand". USA Today.
  18. Bray, Chad (11 March 2013). "Ex-Trader Seeks to Overturn Sentence, Conviction". The Wall Street Journal.
  19. "Trader Brought Low By Feds Hopes Newman Will Clear Name". Law360.com.
  20. "Mike Kimelman Interview on Prison Life". The Gavin McInnes Show.
  21. "The Gary Null Show". The Gury Null Show.
  22. "Dave Lukas Chats with Mike Kimelman". Misfit.
  23. "White Collar Support Group 250th Meeting Reflections: Fellow Traveler Michael Kimelman, New York". Progressive Prison Ministries.
  24. "CRYPTO IQ TRADING EVENT WITH CHARLIE SHREM". WorldCryptoCon.
  25. "Think white-collar prison is like 'Club Fed?' It's not". CNBC. 27 April 2015.
  26. 1 2 "Convicted Insider-Trader's New Book Not Titled 'Take The Damned Deal'". DealBreaker. 14 January 2019.
  27. "Local Man Who Could Have Avoided Jail: Jail Is Best Avoided". DealBreaker. 14 January 2019.
  28. "Michael Kimelman's 'Confessions Of A Wall Street Insider' Is Worth A Read". Forbes.
  29. "Confessions from a Wall Street Insider: The Real Lessons to be Learned". Ethics Unwrapped. 7 February 2019.
  30. 1 2 "Mastering the Basics of Bitcoin and Crypto – The Faerie Review". thefaeriereview.com. Retrieved 4 December 2022.
  31. Confessions of a Wall Street Insider: A Cautionary Tale of Rats, Feds, and Banksters. Simon and Schuster. March 2017. ISBN   9781510713383.
  32. "Waters-McHenry Bill Aims To Close Insider Trading Loopholes In SEC Rule 10b5–1". Meduium. 13 March 2019.
  33. "US v. Richard Lee: Surprising Revelations, and Another Case Invalidated Due To Lack of a 'Personal Benefit' Element". Medium. 15 July 2019.
  34. "H.R. 2534 is the Most Significant Expansion and Clarification of Insider Trading Law in Decades". Medium. 18 August 2019.