27-05-2009, 02:54 PM
This confidential, internal JP Morgan presentation details the aspects of Hedging and monetization, the so-called PrISM concept, Rule 10b5-1 and Postpaid PrISM. Wikileaks contacted JP Morgan Private Bank successfully. The bank declined to comment on the document, although contact was successful.
The introduction into Hedging and monetization, titled Diversifying restricted stock requires navigating complex rules and regulation explains various regulatory limits a trader is constrained by, and explains strategies to optimize investments under these constraints.
One of these strategies, called PrISM (Principal Installment Stock Monetization strategy), is explained in the second part of the document. Besides various details on transaction flows and ROI information, the section also provides popular samples of investors into this program.
The third part of the presentation pertains to Rule 10b5-1, a regulatory rule enacted by the United States Security and Exchange Commission (SEC) and explains how PrISM relates to the constraints imposed by this rule [that is already considered to be object to abuse] This gets more detail in the figures presented in the fourth and last part.
[Wikileaks editors note: The thrust of our source's interpretation about Barry Diller specifically (but not the issue in generally) is probably incorrect. The JP Morgan document released by Wikileaks shows that Barry Diller is not named specifically, although IAC is indeed given as an example. IAC / Diller have issued a strong denial to Wikileaks: "The suggestion that Barry Diller entered into any hedging transactions is incorrect. Mr. Diller did not directly or indirectly hedge or otherwise insure his shares against a decline." — April 5, 2008]
Whistleblower exposes insider trading program at JP Morgan
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[url=http://wikileaks.org/wiki/Image:JP_Morgan_trading.png]![[Image: JP_Morgan_trading.png]](http://wikileaks.org/w/images/JP_Morgan_trading.png)
![[Image: magnify-clip.png]](http://wikileaks.org/w/skins/common/images/magnify-clip.png)
Description of JP Morgans stock program from page 21 of the leaked document.
Legal insider trading in three easy steps, brought to you by JP Morgan and the SEC
KEVIN WILSON, MARIA CHRISTINA PADRO, JULIAN ASSANGE & staff
March 16, 2009
A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing 'how-to' programs and even client service divisions to help well-heeled clients circumvent insider trading regulations.
Most of us think of insider trading as illegal. It allows those with inside knowledge to tilt the playing field, with the small investors invariably losing to the privileged few. Unfortunately for the small investor, the big boys get to play by different rules, and it has all been made legal, thanks to the SEC.
In 2000 the SEC promulgated Rule 10b5-1. The new Rule was designed to address the confusion caused by a series of court decisions that had left investors uncertain about what constitutes insider trading. Rule 10b5-1 was designed to "clarify" what constitutes illegal insider trading.
But top Wall Street houses were not to be deterred from advantaging their big clients at the expense of their small ones. Wall Street firms like JP Morgan found loopholes in Rule 10b5-1 that allowed them to continue trading on inside information "legally." Indeed, JP Morgan has gone so far as to set up an entire 'selling program' within its Securities division to help their clients profit from the loophole.
Documents obtained earlier this month by Wikileaks from JP Morgan Private Bank, which subtitles itself as "World class solutions for wealthy individuals and families", show the firm has a dedicated '10b5-1 Selling program,' along with a 'dedicated 10b5-1 team' to help its clients take advantage of the loophole.
Here's how it works:
1. An insider client transfers all or a portion of their company stock into a JP Morgan Securities Inc. brokerage account.
2. The insider then develops, in conjunction with the 10b5-1 team, a 'phased, pre-planned sales program to be executed at either market or specified prices'.
3. Depending on the information available to the insider (but not the public), the insider can decide whether to execute the sale or not.
By gaming the system this way, JP Morgan teaches insiders how to use their knowledge to create a rigged market, one in which it is the "house" that always wins, and the small investor that always loses.
Alan D. Jagolinzer, an assistant professor at Stanford University Graduate School of Business, completed a study of roughly 117,000 trades in 10b5-1 plans by 3,426 executives at 1,241 companies. He found that trades inside the plans beat the market by 6% over six months. By contrast, executives at the same firms who traded without the benefit of plans beat the market by only 1.9%.http://businessweek.com/magazine/content...014045.htm
One can only guess at how many wealthy executives profited under JP Morgan's "insider trading program," leaving small investors holding the bag.
The introduction into Hedging and monetization, titled Diversifying restricted stock requires navigating complex rules and regulation explains various regulatory limits a trader is constrained by, and explains strategies to optimize investments under these constraints.
One of these strategies, called PrISM (Principal Installment Stock Monetization strategy), is explained in the second part of the document. Besides various details on transaction flows and ROI information, the section also provides popular samples of investors into this program.
The third part of the presentation pertains to Rule 10b5-1, a regulatory rule enacted by the United States Security and Exchange Commission (SEC) and explains how PrISM relates to the constraints imposed by this rule [that is already considered to be object to abuse] This gets more detail in the figures presented in the fourth and last part.
[Wikileaks editors note: The thrust of our source's interpretation about Barry Diller specifically (but not the issue in generally) is probably incorrect. The JP Morgan document released by Wikileaks shows that Barry Diller is not named specifically, although IAC is indeed given as an example. IAC / Diller have issued a strong denial to Wikileaks: "The suggestion that Barry Diller entered into any hedging transactions is incorrect. Mr. Diller did not directly or indirectly hedge or otherwise insure his shares against a decline." — April 5, 2008]
Whistleblower exposes insider trading program at JP Morgan
[/url]
[url=http://wikileaks.org/wiki/Image:JP_Morgan_trading.png]
![[Image: magnify-clip.png]](http://wikileaks.org/wiki/Image:JP_Morgan_trading.png)
Description of JP Morgans stock program from page 21 of the leaked document.
Legal insider trading in three easy steps, brought to you by JP Morgan and the SEC
KEVIN WILSON, MARIA CHRISTINA PADRO, JULIAN ASSANGE & staff
March 16, 2009
A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing 'how-to' programs and even client service divisions to help well-heeled clients circumvent insider trading regulations.
Most of us think of insider trading as illegal. It allows those with inside knowledge to tilt the playing field, with the small investors invariably losing to the privileged few. Unfortunately for the small investor, the big boys get to play by different rules, and it has all been made legal, thanks to the SEC.
In 2000 the SEC promulgated Rule 10b5-1. The new Rule was designed to address the confusion caused by a series of court decisions that had left investors uncertain about what constitutes insider trading. Rule 10b5-1 was designed to "clarify" what constitutes illegal insider trading.
But top Wall Street houses were not to be deterred from advantaging their big clients at the expense of their small ones. Wall Street firms like JP Morgan found loopholes in Rule 10b5-1 that allowed them to continue trading on inside information "legally." Indeed, JP Morgan has gone so far as to set up an entire 'selling program' within its Securities division to help their clients profit from the loophole.
Documents obtained earlier this month by Wikileaks from JP Morgan Private Bank, which subtitles itself as "World class solutions for wealthy individuals and families", show the firm has a dedicated '10b5-1 Selling program,' along with a 'dedicated 10b5-1 team' to help its clients take advantage of the loophole.
Here's how it works:
1. An insider client transfers all or a portion of their company stock into a JP Morgan Securities Inc. brokerage account.
2. The insider then develops, in conjunction with the 10b5-1 team, a 'phased, pre-planned sales program to be executed at either market or specified prices'.
3. Depending on the information available to the insider (but not the public), the insider can decide whether to execute the sale or not.
By gaming the system this way, JP Morgan teaches insiders how to use their knowledge to create a rigged market, one in which it is the "house" that always wins, and the small investor that always loses.
Alan D. Jagolinzer, an assistant professor at Stanford University Graduate School of Business, completed a study of roughly 117,000 trades in 10b5-1 plans by 3,426 executives at 1,241 companies. He found that trades inside the plans beat the market by 6% over six months. By contrast, executives at the same firms who traded without the benefit of plans beat the market by only 1.9%.http://businessweek.com/magazine/content...014045.htm
One can only guess at how many wealthy executives profited under JP Morgan's "insider trading program," leaving small investors holding the bag.
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx
"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.