Starting in January, David Glass came into the office less and less and eventually not at all. One day he’d tell people he was feeling sick, other days he was having family troubles. According to one Assent trader, when somebody asked Glass if everything was okay at home, Glass said, “Say a brucha for my son, Max,” using the Hebrew word for prayer and insinuating that his son was fatally ill. (Another trader says Glass was joking.)
Rumors began to circulate that something wasn’t right at Jasper. A week before the indictments were announced, an online-message-board poster named Blue Thunder warned fellow traders on EliteTrader.com: “Shady characters running Jasper. Watch out!!!”
When the bust was announced on February 28, Tavdy was arraigned in Miami, and Mitchel Guttenberg in Manhattan. Childs and McKeever were each arraigned and released on $250,000 bail. “Today’s events should send a message to anyone who believes that illegal insider trading is a quick and easy way to get rich,” said Linda Chatman Thomsen, the SEC’s enforcement director.
But the lesson fellow traders took away from Glass’s troubles wasn’t what the SEC might have hoped. Insider trading? It happened every day. A friend of Glass’s says he would have done the same thing—anybody would have. As Glass told an associate after his indictment, “I don’t know of any traders who haven’t acted on a stock tip.”
Though Glass’s lawyer says they have no idea what his sentence will be, Glass has told friends that he likely faces eighteen months in prison—a bum deal, they say, considering Glass was just a low-level player in the scheme. In October, the lawyer at Morgan Stanley and her husband, who were at the top of the insider-trading pyramid, were sentenced to just six months’ home confinement for their roles. Glass was “furious” at the news, says his childhood friend, claiming it proved that insiders with connections could get off light while low-end hustlers like Glass were hung out to dry in the SEC’s attempt to prove to the investing public that they’re upholding the integrity of the markets.
“He was always looking for the edge,” says Glass’s former mentor Jonathan Petak. “In a wrong way, I think. If he would have played by the cards, he would have been a lot more successful.” For a case in point, he need only look to his older brother. At precisely the moment of Glass’s disgrace, his brother was experiencing his greatest success: Days after the bust, he launched a new hedge fund.
Glass seems somewhat philosophical about his fate. “Greed’s a killer,” he said to his childhood friend. But that friend says Glass is privately devastated. “He lost everything for nothing.” In a statement issued by his lawyer, Glass says, “I have accepted full responsibility for my criminal conduct. I offer no excuse or defense. I broke the law and I am deeply remorseful.”
But contrition has its limits, especially for a born hustler. Former colleagues claim Glass is already back on Wall Street, financially backing another group of traders in a lower-Manhattan day-trading firm. Not that Glass is advertising it: Two people say they spotted Glass in July entering a day-trading shop located just one block from Jasper’s old offices. When he noticed a former colleague, Glass yanked his blue baseball cap down and lifted a newspaper in front of his face.