Weekly Roundup 6/18/2012

How Curt Schilling Dinged Rhode Island
Matthew Yglesias, Slate, June 13, 2012

Synopsis: Rhode Island lawmakers awarded retired Red Sox pitching star Curt Shilling a $75-million loan guarantee to move his fledgling computer-game company to Providence. Less than two years late the company is broke, and Rhode Islanders are on the hook for the cash.

Takeaway: "It looks an awful lot like a toxic interaction between stupidity, desperation, and Red Sox fandom. In 2010, Rhode Island created a $50 million Job Creation Guarantee Program to offer state-backed loans to entrepreneurs...[E]xpanding it to benefit just one firm was crazy."

For more on state schemes to lure jobs and business, see our March 2 report, “Attracting Jobs"

--Marcia Clemmitt, Staff Writer

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Rajat Gupta Convicted of Insider Trading by Peter Lattman and Azad Ahmed
Peter Lattman and Ahzam Ahmed, The New York Times, June 15, 2012

Synopsis: Rajat Gupta, who reached the pinnacle of corporate America as managing partner of McKinsey & Co. and director at Goldman Sachs, was found guilty of conspiracy and securities fraud for leaking boardroom secrets to billionaire hedge fund manager Raj Rajaratnam. The case caps a wave of successful insider trading prosecutions over the last three years that penetrated some of Wall Street’s most vaunted hedge funds and reached into America’s most prestigious corporate boardrooms.

Takeaway: The case demonstrated that successful insider trading prosecutions could be largely built on circumstantial evidence like phone records and trading logs. Previous convictions, including the trial of  Rajaratnam, have relied more heavily on wiretaps.

For background see the CQ Researcher report “Financial Misconduct” (Jan. 20, 2012).

--Thomas J. Colin, Contributing Editor