From Abacus to Dead Prez: A Glossary of Recent Wall Street Scandal

Galleon: It was already astounding news when the billionaire hedge fund manager Raj Rajaratnam was arrested in October, accused of

Galleon: It was already astounding news when the billionaire hedge fund manager Raj Rajaratnam was arrested in October, accused of running the biggest insider trading scheme in the industry’s history. By the end of the year, the investigation of his firm, Galleon, had only gotten bigger, and in April it sucked in Goldman Sachs (GS) director Rajat Gupta, who soon stepped down. He declined to seek board reelection because of other commitments, he said at the time.

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Magnetar: Just before ProPublica won a Pulitzer Prize this year, it released a 5,900-word exposé on this cosmically named hedge fund. Magnetar created and bet against mortgage deals that wiped out about $40 billion when they eventually became worthless: ACA Aquarius, Vertical Virgo, Sagittarius and Draco are some of their fun names. The article explained how the firm helped perpetuate the subprime mortgage market by creating investments to bet against.

Mistaken Moody’s: There was news this week that Andrew Cuomo is looking into whether Goldman, Morgan Stanley (MS), Citi, Merrill Lynch and four other banks misled credit rating agencies. So were Moody's, Fitch and S&P simply duped into giving banks’ deals inflated ratings? Not quite. For one, those agencies posted their models so that bankers could “reverse engineer” to get desired ratings, a source told the Times. Meanwhile, Moody’s was already in a heap of trouble, thanks to a notice from the S.E.C. As for S&P: “Did the company make mistakes? I’ve never used the word ‘mistake,'” a spokesperson said recently.

New Madoffs: There is only one Bernie, but Ponzi schemers continue to make news. Minnesota’s Tom Petters was recently sentenced to 50 years in prison for his $3.65 billion plot (the second-largest in American history); Scott Rothstein pleaded guilty to his $1.2 billion scheme; and Miami’s Nevin Shaprio was charged soon after.

The Orca: After the horribly violent death of SeaWorld trainer Dawn Brancheau in February, activists criticized the private-equity giant Blackstone, who had bought SeaWorld and other theme parks for $2.3 billion. The firm, however, was contrite. There’s a metaphor about private equity in here, somewhere.

Repo 105: The Lehman Brothers’ bankruptcy examiner’s report broke news of Repo 105, a spectacular accounting trick the investment bank used to fluff up the look of its balance sheet as it hurtled toward death in September 2008. “When I read this, I giggle a little bit,” a former executive said at the time. Have other banks used 105-style tricks? Bank of America may have—and about 17 others. “Efforts to manage the size of our balance sheet are routine and appropriate,” a Bank of America spokesperson said in March, and again in April.

The Rubin Cuddle: “And not long afterward the former Treasury Secretary had his tongue down my throat and hands everywhere, sort of like an octopus.”

From Abacus to Dead Prez: A Glossary of Recent Wall Street Scandal