DealBook: Judge Says Hedge Funds May Have Used Inside Information

The SEC has charged the former partner in charge of KPMG’s Pacific Southwest audit practice and his friend Brian Shaw with insider trading on nonpublic information about firm clients.  Here's the full release: *****

It’s been two decades since Michael Milken, aka “the junk bond king,” was sentenced to ten years in prison following a blockbuster insider trading investigation that shined a light on bad Wall Street behavior during the go-go 1980s. At the time, federal prosecutors hoped the Milken conviction, and that of his fellow Wall Street fraudster Ivan Boesky, would send a powerful message to Wall Street that there are serious consequences for insider trading.

By Troy Racki:After spending 38 months adrift in the turbulent waters of bankruptcy court, the prospect of a new Washington Mutual (WAMUQ.PK) is now rapidly steaming "all ahead". Confirmation of the company's third plan of reorganization is set for February 16th and finally has the blessing of the company's equity committee after months of mediation over insider trading charges against four hedge funds which hold positions in the company's debt securities.

Emanuel Goffer, 32, was part of an insider trading scheme devised by his older brother, Zvi Goffer, who bribed corporate lawyers for confidential information about corporate mergers.

Federal agents arrested a research firm executive on charges that he helped hedge funds get inside information, while a judge ruled that wiretaps could be used against the founder of the Galleon Group.

Leo E. Strine Jr., the chief judge of the Delaware Court of Chancery, is known for his colorful opinions. But this week, Delaware’s highest court said he was out of bounds.

Troy Racki submits:Federal bankruptcy Judge Mary F. Walrath indicated on Thursday that she may allow for an examination into allegations that four hedge funds had participated in insider trading regarding Washington Mutual's (WAMUQ.PK) chapter eleven proceedings.

[AP] - A Delaware bankruptcy judge on Friday rejected Washington Mutual Inc.'s reorganization plan, ruling that the protection from future liabilities that it gives to the bank holding company's former executives is too broad.