Monday, Nov. 4, when the long-running insider-trading case against Steve Cohen’s SAC Capital Advisors culminated with the firm pleading guilty, Preet Bharara had won again.
Bharara is a name you’ve probably heard even if you don’t pay much attention to Wall Street legal intrigue. During his three years as the U.S. attorney for the Southern District of New York — the most prestigious and powerful prosecutor gig in the country — he’s taken down the world’s most threatening terrorists, cybercriminals and corporate wrongdoers, and will probably be worth keeping an eye on after his term expires next year.
Here are a few things you ought to know:
Why is the SAC Capital Advisors case such a big deal?
Until recently, regulators and prosecutors haven’t been all that good at punishing Wall Street firms for misdeeds leading up to the financial crisis. The SAC prosecution is a big exception.
Victory in the criminal case against SAC is the first of its kind in a generation, and resulted in the largest fine ever, at $1.8 billion in total for the $14 billion institution. And the implications could be substantial, setting a precedent for further prosecution of Wall Street shenanigans — like JPMorgan’s alleged hiring of the children of Chinese dignitaries, which Bharara is considering whether to take on.
Where did this guy come from?
Bharara was born in the northern Indian state of Punjab in 1968, and emigrated to Eatontown, N.J., as an infant (to this day, the Indian press closely covers his career).
The son of a pediatrician, he lived a “typical American” childhood, editing his prep school’s newspaper and becoming captain of the speech team. He went to Harvard, and then Columbia Law School along with his younger brother, Vinit, who later sold a company that sells diapers on the Internet to Amazon.com for $540 million.
After a few years in private practice, Bharara landed a spot in 2000 as an assistant U.S. attorney for the office he would later head (then run by Mary Jo White, who chairs the Securities and Exchange Commission).
He specialized in organized crime, from racketeering to narcotics — where he would learn the use of tools like wiretapping, which he later deployed against hedge funds’ secrets.
In 2005, Bharara went to work as chief counsel for Sen. Charles Schumer, D-N.Y., leading an inquiry into the Bush administration’s firing of U.S. attorneys and ultimately securing a key recommendation for the Southern District job.
What else has he dealt with?
Being a U.S. attorney doesn’t mean that you’re the one lawyer charged with making every case in your jurisdiction. Rather, it means you run a large office of attorneys — the Southern District has 230 of them, which Bharara thinks is still not enough — who have a bunch of cases each.
Bharara has made some strategic choices with his resources that suit the evolving nature of criminal activity. Along with beefing up investigation of political corruption and combining the offices of international narcotics and terrorism, he created the Complex Frauds Unit to go after schemes like SAC’s, supporting his philosophy that no one is too big to jail.
It also put the office on a legal frontier, pursuing digital currency fraud and cybercrime groups such as LulzSec and Anonymous, which not all prosecutors are well equipped to take on.
Bharara’s office has had an impressive record on insider trading cases, with 73 guilty pleas as of July, as well as other white-collar fraudsters like Bernard Madoff. But it’s equally well known for its prosecution of terrorists and highjackers from around the world, including a Somali pirate, al-Qaida kingpins and homegrown bomb plotters.
Bharara has been aggressive in going after his targets’ assets, yielding more than $3 billion in 2012 — the largest haul ever for any U.S. attorney.
Why do people think he’s so special?
At first, Bharara kept a low profile even as his office started making headlines, granting few interviews and keeping news conferences brief. Nevertheless, adulatory profiles started rolling off the presses, including a February 2012 Time magazine cover story.
During the past few months, Bharara has been speaking more widely, chatting with journalists and doing the rounds on TV (to the point where a federal judge complained about his “tabloid” approach).
In all his appearances, he articulates something Americans haven’t heard much from top law enforcement officials: There is a culture of corruption on Wall Street, and he’s there to end it.
“The pendulum has swung too far back the other way,” Bharara said in September. “I think we should be entering a serious era of institutional accountability, not just personal responsibility.”
“Casual and rampant and routine insider trading tells everybody at precisely the wrong time that everything is rigged and only people who have a billion dollars and have access to and are best friends with people who are on boards of directors of major companies, they’re the only ones who can make a true buck,” he told Time in early 2012.
Elevating his prosecutions to the level of a moral crusade leverages his office’s resources by sending a message.
As Neil Barofsky, former special inspector general for the Troubled Assets Relief Program, put it, Bharara’s presence in high-profile cases like the one in 2011 against hedge-fund manager Raj Rajaratnam “made sure that the target audience, traders on Wall Street, fully understood the extraordinary lengths that his office will go to discover these crimes, and that justice will be served.”
What’s this about Bruce Springsteen?
Yes, the Boss called out Bharara at a concert once, in thanks for his get-tough approach to the plutocrats Springsteen’s songs so often rage against.
© 2013, The Washington Post