Last summer, 400 finance types gathered to hear Preet Bharara, the top federal prosecutor in Manhattan, speak at a conference at The Pierre hotel.
He surveyed the investors, traders and analysts assembled in the gilded main ballroom and remarked that the crowd was larger than he had expected. “So I just wanted to apologize in advance that I don’t have enough subpoenas for all of you,” he said.
The audience roared with laughter and surprise.
“Obviously, I’m kidding,” Mr. Bharara added in a reassuring tone. There was the briefest of pauses. “I do have enough,” he said.
The man who has sent more financiers to jail than anyone else since the 1980s is disarmingly funny. He also has a mild addiction to diet soda and an innate urge to interrogate.
Arriving at a Tribeca restaurant on a recent January afternoon, Mr. Bharara begins peppering me with questions before we can even slide into a corner booth. The tone is friendly, not pushy, but the grilling continues for nearly 10 minutes.
Since 2009, Mr. Bharara has led the largest campaign against illegal insider trading in a generation or more. To date, more than 70 people have been convicted on criminal charges. They range from lowly junior analysts to Raj Rajaratnam, a billionaire hedge fund manager. Many were betrayed by their own words caught on secret government wiretaps, a tactic previously reserved for mobsters and drug dealers.
The investigation into insider trading is at best tangential to the financial crisis. But it burst into the public eye at a time when Americans craved accountability, and in particular, proof that rich and powerful people are not beyond the law. Enter Mr. Bharara, who managed to secure prison sentences for several such individuals.
Add to the mix the fact that Mr. Bharara – born in India but raised in New Jersey – is the embodiment of immigrant achievement and it’s easy to understand why he has achieved semi-rock-star status. Last year, the 44-year-old appeared on the cover of Time Magazine with the headline, This man is busting Wall St.
Other tributes were more unusual. At a Bruce Springsteen concert last October, the musician dedicated a song to Mr. Bharara, who was in the audience with his young son (the relevant lyric: “Send the robber barons straight to hell.”) When he heard his name uttered by The Boss , Mr. Bharara said his reaction was “complete muscular paralysis.”
Wearing a charcoal grey suit and a red-and-pink striped tie, Mr. Bharara fits right in at City Hall restaurant, a favourite with judges and lawyers from the nearby federal courthouse. It is past lunchtime and he declines the offer of food. He isn’t a big midday eater and appears to subsist on Diet Coke. He promptly orders one, the first of three. With the authority of a connoisseur, he informs me that, for the best taste, glass bottles trump aluminum cans.
I ask him about the sheer number of insider trading cases he has pursued and what that tells us about the financial industry. When people believe the authorities aren’t paying close attention, he says, a culture can develop where the attitude is “very cavalier and casual about bad conduct.” So a prosecutor’s job is to change that calculus.
If engaging in wrongdoing means running the risk not simply of paying a fine, but spending “time away from your children and your spouse and your family and open air, behind bars, for a long period of time – that, I think, severely alters the risk analysis,” he says dryly.
What connects the insider-trading investigation to other recent financial scandals is a “degradation of corporate culture,” Mr. Bharara says. He isn’t much impressed when executives tell him about their expensive systems to avoid regulatory infractions and worse. Such compliance programs and teams of in-house lawyers are necessary but not sufficient in his opinion.