John Kinnucan, a principal at Broadband Research, famously declined to cooperate with the feds when they showed up at his door asking him to wiretap his conversations with his client, SAC Capital Advisor, as part of a widespread investigation into insider trading, and he sent out a blast e-mail to clients and contacts the FBI named as targets to tell them. For refusing to help the feds, whom he called “the eager beavers,” Kinnucan became something of a Wall Street folk hero, a label he embraced by continuously talking about this e-mail. A hero, that is, until Reuters got a hold of the e-mail’s recipient list Thursday evening and reported that it went out to investment advisory firms Friess Associates and Sonar Capital Management, giant hedge fund Citadel Group, and money manager Ameriprise Financial, among other industry players, so now we all totally know who the FBI might be circling. The e-mail, sent to more than 50 people associated with some twenty hedge funds and mutual funds, may have also gone out to some finance folks that the feds didn’t even suspect might be involved in insider trading, so now that the list is leaking, “there is a fear that by simply being a recipient on the email, federal authorities may take notice and come visit these contacts too.” What’s more, Kinnucan didn’t even bcc these people, so a cursory glance at the recipients revealed to all the other recipients exactly who might have reason to fear the insider-trading bust.
According to Reuters, “Officials for a few of the funds said that Kinnucan, in disclosing the identity of his clients, may have violated an expectation of privacy that traders and analysts had when they signed up with him. One person said Kinnucan may not have ‘exercised the best judgment’ in identifying his contacts on the email.” And now that John Kinnucan might be having second thoughts about having fired off a crazy e-mail to all his contacts, we’re reminded that we are all, after all, only humans, and should never try to be heroes.