Insider Trading With Eugene Plotkin and David Pajcin

Eugene Plotkin

By now, you’ve probably heard something of the story about Eugene Plotkin and David Pajcin, the two guys who worked for Goldman and Merrill and allegedly had their Croatian aunt and some stripper make insider trades off information from sources that included pre-press copies of Businessweek (the mole they planted in the printing press, they met on Craigslist, thus adding yet another layer of intrigue).

Sounds like the plot of a movie, doesn’t it? STRIPPERS! CASH! OLD LADIES! CRAIGSLIST! Sensational.

Last night on On The Money I saw an interview with a couple directors who said one of these guys actually DID make an indie flick a couple years ago with a vaguely similar plot. From Bloomberg:

In 2003, Plotkin, 26, shot “One Way,” a feature-length independent film he wrote, produced, directed and starred in, playing a junior finance employee framed for stealing millions of dollars from a client and for murder. Performing as a drug dealer: David Pajcin, 29, a Goldman employee who is accused with Plotkin of masterminding the $6.7 million scheme beginning in 2004.

CNBC showed the trailer. It’s cheese. I’d like to see the movie make it to Youtube.

There are a couple of lame corporate-training type movies floating around that you may be able to find that point out the “evils” of insider trading. One is “Think Twice” (made in like 1990 or 1991, at the start of the nineties feel-bad era) and the other is “Think Twice: The Sequel” which has the updates for Sarbanes/Oxley, and reminds you to not post private information about your company on TEH INTARNETS.

A few thoughts: Insider trading is usually not premeditated like this. Most of the time, there is a very short gap between when an ‘insider’ would get the information, and when it would go public. The decision to act on it — or not act on it — has to be made very quickly. Think about Waksal, and especially Martha. They made split-second decisions for sure, acting on a gut instinct to preserve their capital.

I don’t like insider-trading laws, because most of the arguments *for* them sum up to “WAAAAH IT ISN’T FAIR I LOST MONEY AND THEY DIDN’T.” I think in many cases they ask people to perform a near-superhuman act of taking an unnecessary loss justified only by the supposed guilt of having access to privileged information. Plotkin and Pajcin, of course, have been accused of stealing the information in question, so it’s much easier to make a case for their criminality.

If you’re further interested in the topic, read this and this. This guy wrote the seminal tract opposed to insider-trading laws in 1966 and continues to drill home the point, mostly on deaf ears.

~Alyx

Update: March 13, 2009

Eugene Plotkin was convicted of insider trading and sentenced on January 4, 2008 to 57 months in jail. He was ordered to pay a $10,000 fine and to forfeit up to $6.7 million, the amount of the scam’s illegal profits. Plotkin pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading. According to Securities Docket, Pajcin may have left the country after being released from prison.