Chapter 8 - I Fought The Law

The judge was actually lenient to only give me four months. As I noted earlier, my punishment could have been a lot worse, potentially as high as 18 months had I fought. The probation officer recommended an additional $20,000 fine. But the judge saw that I had been significantly punished already. The SEC fine of $305,000 and an exorbitant amount of legal fees hit hard. I did significant damage to my career and reputation. I lost my CFA designation.

Actually, the last one I really don't care about. I used to be proud to include CFA after my name. I passed all three exams in a row. In 2000, that was a rare feat. Only around 10% of all candidates pass the exams in three consecutive years, so doing so was a special accomplishment. But like most organizations, the CFA Institute is greedy and now seemingly only cares about money. They have overly diluted the brand and aggressively pursued more and more members in India and China. I remember reading an article in 2015 on the Huffington Post suggesting that the CFA was a scam. I was angry about that article. How dare they! Now I think it may be spot on.

Notwithstanding the CFA designation, the rest of the punishment for my crime has been pretty severe. The SEC barred me from, "Participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for the purpose of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock." That means working for an investor relations firm or sponsored research firm like Zacks or Edison is also off the table. Investment banks are likely not going to hire me either.

The SEC and DOJ investigations also put a heavy toll on my physical and mental state. At first, I lost weight; then I gained weight. I was angry, I was depressed, even borderline suicidal at times. At my sentencing, the judge mandated that I participated in counseling while in prison because he was concerned about my mental health. I was depressed, bitter, and not much fun to be around.

The weight of the federal government crashing down on you is excruciating. No one wants this to happen. Outside of Martin Shkreli, who oddly seems to enjoy his infamy, it's a nightmare. Take for example former Chesapeake Energy CEO, Aubrey McClendon. He was indicted on federal anti-trust conspiracy charges on March 1, 2016. On March 2, 2016, he drove his car 89 mph into a concrete bridge embankment, killing himself instantly. No alcohol or drugs were involved. He was not wearing his seatbelt.

So consider this a public service announcement: Don't commit insider trading. It's not worth it. Plus, they will catch you. I learned a lot about federal investigations throughout this process. They find everything. They get your brokerage statements. They see your bank account. They read your emails and check your phone records. Oh, and don't for a second think your Twitter DMs are safe. They see those too. It's just not worth it.

Yet after all this loss, what pisses me off the most is that I made plenty of money without having to break the law. I made $559,000 in 2014. I made almost $1.45 million between 2014 and 2016, and only roughly $65,000 net of that was due to my illegal activity. I made over $400,000 in 2016, a year after I got fired from Zacks. I'm a good stock analyst and investor without having to front-run research reports. My successes at Bio5C proves that. I could have had it all. I had every reason to stay straight. I think that's what hurts the most.


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