BackPage.com Ad Seeks 'Beautiful Ladies' To Seduce Businessmen For Insider Trading Info
The crassness of the BackPage.com ad was stunning: "Do you have an open mind, a sense of adventure and the desire to make some serious cash? We're a group that specializes in extracting key pieces of information from business leaders by seducing them with beautiful ladies such as yourself."
The ad -- posted in the "adult jobs" section of classified ads -- says it will pay $5,000 to $20,000 for information obtained, and is looking for "beautiful, sophisticated ladies who will do anything it takes."
Backpage is no stranger to controversy; last year, the website was accused of facilitating the trafficking of children, leading the Goldman Sachs Group Inc. to divest from Village Voice media, which then owned the site, Reuters reported. But this ad seems to be stepping over some line. Surely it was illegal?
But Alan Kaufman, a partner in the New York office of the international law firm Kelley, Drye & Warren LLP specializing in white collar crime, told AOL Jobs that the "open and blatant situation of women being paid money to launch romantic relationships to extract information is ... unique." Most often, Kaufman said, the insider information is revealed during consensual romantic relations. And the courts have a history of ruling that kind of conduct illegal.
U.S. vs. Gansman, James Gansman was accused of tipping off his mistress, Donna Murdoch, telling her about some mergers and acquisitions that his employer, Ernst & Young LLP, had planned. Thanks to trading on the insider information, she reportedly raked in about $390,000.
In 2009, Gansman was convicted on six counts of securities fraud, and in 2011 the ruling was upheld after an appeal. Murdoch faced 15 counts of securities fraud, Bloomberg reported, and took a plea bargain that put her on two years of probation.
"There are any number of cases in which information was tipped during 'pillow talk' that resulted in conviction," Kaufman said, and so paying "women who are going to do exactly that" would presumably lead to a similar result.
But, as CNBC.com notes, the case may not be airtight. The act of insider trading is not itself expressly prohibited by U.S. law. Instead, convictions usually result from an interpretation of SEC Rule 10b-5 which outlines fraud. For insider trading to qualify, the alleged insider trading would have to feature both the disclosure of private material, as well as a financial benefit for the person leaking the information.
In other words, if private financial information was shared accidentally, and brought no financial benefit to its source, the act might not be illegal under this SEC rule.
So if the targeted businessman in the BackPage ad "thinks he is just blowing off steam about a business deal to a one-night stand who was going to sleep with him anyway," said CNBC senior editor John Carney, "this entire scheme wouldn't violate any insider trading rules."
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Dan Fastenberg was most recently a reporter with TIME Magazine. Previously, he was a writer for the Thomson Reuters news service's Latin America desk. He was also a reporter and associate editor for the Buenos Aires Herald while living in South America.
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