Jury selection began today in the Justice Department's insider trading case against a man named Mathew Martoma. It's part of a much bigger federal investigation into a hedge fund called SAC Capital which, at its peak, held $14 billion under management. Over the summer SAC agreed to the biggest insider trading fine in history almost $2 billion.
Martoma's the eight executive from SAC to face charges, and the other seven have pleaded guilty or been convicted. But the big fish for the Feds is SAC founder Steven Cohen.
Smith says Cohen was considered a Wall Street legend for the huge returns his hedge fund produced, but the evidence for insider trading eventually became too obvious to ignore:
"It didn't escape attention. In fact people started to pay close attention. But the FBI and US Attourney's offices were not really looking at hedge funds until the mid 2000s, and of course the first target they took on was the Galleon Group headed by Raj Rajaratnam. But it was from that case that a number of people were targeted, plead guilty, flipped, and they started to point to SAC Capital as the place that the feds ought to go next.
To hear the entire interview, click play above.
Check out some selected clips from FRONTLINE below.
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