Capital Account: Reggie Middleton on MF Global, Goldman Sachs, and the Vampire Squid (12/01/11)

Barack Obama may seem calm when he talks about the eurozone crisis, but behind the scenes the financial times reports there is morbid fear about a meltdown in europe, and vice president Biden is heading to greece amidst austerity marches as part of the administration's attempts to quell the panic. But how does what happens in europe affect the Americans at home? It may boild down to the banks. With the housing market back to 2003 price levels, the US banking sector cannot afford more asset write downs from european debt. It is being hit on the one side by a slumping US economy and housing market, and on the other by Europe's debt problems. So how have these banks put us all in this position, and why haven't regulators done anything to fix the problem? Well, a senate hearing on MF Global's failure and collapse is looking into one of these regulators...the Commodities Futures Trading Commission (CFTC). We speak to independent analyst and entrepreneurial investor Reggie Middleton, of Boombustblog.com, to get his take on all of this,

and on why he thinks Goldman Sachs -- the "vampire squid" of Matt Taibbi's famous Rolling Stone Article -- may be the one of the most leveraged and dangerous banks on the chopping block after MF Global.

We also cover some of the lighter stories of the day, including a new baby tax that a london restaurant has started charging customers. It is a 3 pound baby tax which costs a little under five dollars. McDain's restaurant in Monroeville, PA, has taken this a step further already and banned all children under the age of 6 entirely. We also provide viewers with a list of the top 10 most shoplifted items in the US according to a recent study.

Former Goldman Sachs director Gupta guilty of insider trading

New York—
A jury has convicted former Goldman Sachs director Rajat Gupta in his high-profile insider-trading case in New York.

A federal jury had been weighing Gupta’s fate for two days. The jury of eight women and four men found Gupta guilty of four criminal counts in a wide government push against insider trading.

Gupta was found guilty of three counts of securities fraud and one count of conspiracy for leaking stock tips to Raj Rajaratnam, head of the Galleon Group hedge fund. He was acquitted on two counts of securities fraud.

Each fraud charge carries a sentence of up to 20 years in prison; the conspiracy charge could result in up to five years. Gupta will be sentenced on Oct. 18.

Gupta, 63, was the highest-profile defendant to face federal charges in a wide-ranging insider-trading scheme headed by Raj Rajaratnam.

Rajaratnam was found guilty last year and sentenced to 11 years in prison.

Like Rajaratnam’s trial, Gupta’s had its share of Wall Street star power. His trial featured multiple days of testimony by Goldman's chairman and chief executive officer, Lloyd Blankfein, as well as videotaped testimony by Ajit Jain, who is seen as a potential successor to legendary investor Warren Buffett to run Berkshire Hathaway.

Federal prosecutors in Manhattan produced emails, phone records and other documents in their bid to prove Gupta was a highly placed tipster for Rajaratnam, providing illegal inside information to Rajaratnam, head of the Galleon Group hedge fund.

Gupta's defense team portrayed the government's case as circumstantial, arguing in part that the well-connected Rajaratnam could have gotten tips elsewhere on Wall Street.

Gupta chose not to testify at his own trial.

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http://www.latimes.com/business/money/la-fi-mo-rajat-gupta-guilty-of-insider-trading-20120615,0,6959199.story