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Preet Bharara Steals the Show at EisnerAmper’s Alternative Investment Summit

Aug 1, 2018

If your nickname is “The Sheriff of Wall Street” and you’ve notched more than 85 convictions, chances are you have some pretty good stories to tell. As the keynote speaker at EisnerAmper’s third annual Alternative Investment Summit in Manhattan in June, Preet Bharara definitely didn’t disappoint. Interviewed by EisnerAmper CEO Charly Weinstein, Preet regaled the 350-plus attendees in a thoughtful, candid, often humorous manner. Those lucky enough to attend will certainly remember the evening; for those who did not, I’ve tried to capture the spirit and substance in this overview.

Raison d'etre

Preet noted that it was a lifelong dream to become a U.S. Attorney -- not for the monetary compensation it promises, but for the exhilaration that comes from arguing before a judge and jury when the stakes are the highest. This form of public service allowed him to practice a type of law where he fervently agreed with his own position and what he said. Having supervised 200 attorneys and running an institution with a $50 million budget, the end game was keeping people safe—whether that was from organized crime, white-collar criminals or terrorist threats. He also tried to make good things better, such as when he worked on diversity issues during Supreme Court nomination hearings. 

You could argue that attorneys and actors are not that far removed. Both essentially perform before an audience. This is where Preet likes to tell the story of the popular television show Billions, where the lead character, played by Paul Giamatti, is loosely based on Preet’s tenure as U.S. Attorney. He jokingly thought this unlikely professional fringe benefit might make his parents forgive him for not going to medical school and suggested they check out the show. After seeing the racy nature of the show and the character’s idiosyncrasies, they never mentioned it again. 

Why They Do What They Do

One of the most fascinating parts of the discussion was when Preet delved into the psychology of crime. When you’re a multi-millionaire and on top of the world, why commit insider trading? For many, getting to the top is easy, staying there is more difficult and it requires an edge, even if illegal. Preet used the analogy that many of those caught using banned substances in sports are the top players. They really don’t need to cheat; it often comes down to making a bad decision.

And what do these criminals have in common? They often offer clients exclusivity, such as Kenneth Ira Starr “the broker to the stars” who swindled $35 million from celebrities in a Ponzi scheme. Most give the appearance of affluence; they look the part. Preet cited Hassan Nemazee, who looked like he came from central casting. Here was a distinguished-looking gentleman, and powerful political contributor, who cited a “misunderstanding” and was detained at JFK airport in the process of fleeing to Italy after taking a fraudulent $100 million loan from HSBC to pay back a fraudulent loan from Citibank.        

Fraud also has its enablers. Preet often heard something along the lines of: “You know, it was weird.” As in, “You know, it was weird. This enormous company used a small accounting firm in Juneau, Alaska.” But dig a little deeper, take away the window dressing and what was weird became rather obvious.

You’re Not Going to Take a Swing at Me, Are You?

Business leaders don’t really ask questions such as: “How much time should we spend thinking about the competition or about creativity?” Asking the same about compliance is like asking: “How often would you like the FBI in your kitchen?” Suffice to say, it’s not a cookie-cutter number of hours, rather the appropriate amount of time to remain compliant. As Preet said to a group of NYSE general counsels, “Compliance shouldn’t be different than other business decisions. It should be in the DNA of a company, not a separate office.”

Ultimately, compliance comes down to people. Preet would ask his staff: “How do you feel knowing that if you do your job right, you’ll be the cause of people going to prison and losing their freedom?” He wasn’t looking for an answer like “no problem.” Why? Because it’s not supposed to be easy. 

Posed another way, he asks college students: “After six months at a firm, you suspect a colleague of insider trading. What do you do?” For Preet, the extremes of “go right to the authorities” or “it’s none of my business” aren’t the right answers. The point is, compliance is often not a black-and-white issue. You first need to examine the circumstances surrounding each case.

And how do the most powerful of business people, titans of capitalism, feel about Preet? He talks about the time when a powerful-looking guy in an expensive suit noticed him and asked, “Are you Preet Bharara?” His half-joking, half-cautious response, “Yes, you’re not going to take a swing at me, are you?” The imposing presence said, “I just want to shake your hand. I’m sick and tired of insider trading, and it’s not fair to people who play by the rules. I appreciate it.” Honest people simply want a level playing field.

What’s Next?

After years of keeping his political views muted, Preet recently registered as a Democrat, calling himself a liberated private citizen who now looks forward to voting. But he’s got more on his agenda than that.

A Distinguished Scholar in Residence at the NYU School of Law, CNN pundit and popular podcaster, he talks about writing a book—calling the process a hard and lonely affair. Not the type of legal tell-all you might think, Preet would like to cover philosophical issues such as how justice is delivered, the investigative process, evidence, how to treat powerful people like anyone else, punishment versus rehabilitation, the ethics of flipping witnesses—the hard stuff they don’t teach you in a book or class.

To check out our blog series from each panel from the EisnerAmper 3rd Annual Alternative Investment Summit, please click below.

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Nicholas Tsafos

Nick Tsafos is the Partner-in-Charge of EisnerAmper’s New York office and Blockchain & Digital Assets Group, a member of the firm’s Executive Committee, and is also an Audit Partner. He was instrumental in the launch and evolution of EisnerAmper Global, a network of independent firms with member offices in key financial centers around the world. Mr. Tsafos has over 30 years diversified accounting and auditing experience, including with hedge funds, private equity funds, broker-dealers in securities, registered investment companies and investment advisors.  

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