DirtyWorks said:
I'd be very interested to read about methods of assigning trades to Hein. Post more if you got it!
There are probably people on this board with hands-on experience who could describe it better but...
If one is managing accounts for multiple clients one isn't necessarily going to login to each client's account and make the trade directly from that account. That could be a headache during a hectic trading day. Instead one makes trades from a trading account and after the markets close, one can allocate those trades to differing accounts.
One could make it so trades are time-stamped as they happen and assigned to specific accounts at the time of the trade. This makes the allocation process straightforward.
Or one could give an average price for all the trades that took place over the course of the day.
Or one could selectively allocate favorable trades to favorite clients. (Unethical but seeing that we know we're dealing with unethical people...)
So say you bought 300 shares of stock X at the open for $10/share. At noon, X goes to $5, you sell 100. At 2pm it goes to $15, you sell 100, at the close it's back to $10, you sell 100. Using the third method, you give the loss to a client you don't like (or your own account), the break-even to whoever, and the profitable trade to your favorite.
Or you could have two trading accounts. At the open, in one account you buy X, the other you sell X. At the market close, you close both positions. One of these is going to show a profit. You assign that one to your favorite. The losing one to yourself. You've effectively transferred money.
While directly transferring $500,000 or a couple million to Person H's bank account would leave a very obvious trail that would be difficult for Person H to explain, allowing Person H's trading account to grow from say $500,000 to $2.5 million over five years would provide good cover. Even if one were to investigate his account, one would probably just see a bunch of profitable trades. It would take some legwork to compare that to all the other trades that took place (and were allocated elsewhere) to see that Person H's account was benefiting from cherry-picking.
Person H has a good excuse when he transfers his money from the brokerage account back to his bank. "I had a very talented trader working for me!"
The examples I gave were crude. There are probably more complex ways of doing this that are harder to discern as being out-of-the-ordinary.
Not saying something like this happened, but it would be a discreet way to pay a bribe and somewhat difficult to prove anything unseemly happened.