M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Wednesday, March 30, 2011

"Getting an edge"

I've stayed away from the Galleon trial for the most part. Not because it's not interesting, in fact it's way too interesting.  It would suck up all my free time if I were to try to follow it too closely.  The testimony of Adam Smith (nice name for a hedge fundie, I guess) as reported in Bloomberg yesterday caught my eye, though.

“Research is sort of doing your homework ahead of time,” Smith told jurors. “Getting the number is more like cheating on the test.” ...

“I was tasked with doing research, getting an edge,” Smith testified when asked about leaks he said he got from an Intersil insider. ...

“Getting an edge is the key component to arbitraging consensus” when hedge funds are “looking for situations” in which a company’s results differ from Wall Street expectations, Smith said. “You need to have an edge.”

For Smith, getting an edge meant receiving inside information from friends and insiders.  Smith has since pled guilty to insider trading and cooperating with the Feds.  "Getting an edge " turned out to be not much of a career move for this Harvard MBA.



Insider Trading | Permalink

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