Rich Fools?...More Like Poor Buffoons

The NY Times has an interesting article this morning about the extent of Galleon's insider trading savvy, or lack thereof. In its final complaint against the now fully sunk fund, the SEC alleges that Galleon amassed a long position in AMD off insider information about the company's pending transaction with two Abu Dhabi entities. However, as the NY Times astutely notes, the SEC sweeps one small fact about these transactions under the rug: they ended up losing Galleon close to $30 million, an amount larger than all of the fund's alleged ill-gotten gains combined. The fact that Galleon didn't profit (and heavily lost) from certain material nonpublic information doesn't blow a hole in the government's case, but it does weaken it. The SEC should've just left the AMD matter out of the complaint altogether. After all, Judge Rakoff, no fan of the organization, may not be so keen to side with the SEC against a fund that on net lost $10 million from insider dealing.