Flirting With Proprietary Information


In the fall of 2004, a fortysomething investment banker named Donna Murdoch logged into Ashley Madison, the discreet dating website married people visit "when divorce is not an option," and introduced herself to James Gansman, a partner at Ernst & Young in New York. The two struck up a relationship, meeting occasionally in hotels in Philly, New York, and California, and talking on the phone about their lives: James told Donna about how he was kicking ass at work, Donna told James about how she was struggling with her subprime mortgage.

Eventually the two settled into a comfortable day-to-day routine in their respective offices in New York and Philadelphia, staring at the same Yahoo Finance screen.

Sweet. Bill and Melinda Gates used to do kind of the same thing when they were long-distance dating. They'd see the same movies in different places and then talk about them on the phone. We just though we'd mention that, because that's the kind of information we have trapped inside our brains, and we hope that by releasing it we can make room for other things. Anyway, Donna and James's relationship did not go the way of Bill and Melinda's.

Eventually, their conversations about business grew more specific.

Mr. Gansman led Ms. Murdoch in a guessing game about which deals he was working on, she said. "The game was that I wouldn't be looking and he would give me hints: The market cap of two billion or market cap of 400 billion, and here's what they do, and he'd read it to me, and ultimately make sure I guessed," Ms. Murdoch testified. Before long, the guessing game fell away. Mr. Gansman told her more directly about upcoming deals of Ernst clients, she said.

She made $400, 000 off the deal, and the SEC noticed. He made nothing, and now he's going to jail. The end.

Insider Affair: An SEC Trial of the Heart [WSJ via Business Insider]