Mike Malatesta

Entrepreneur | Author | Coach

Mike Malatesta

Entrepreneur | Author | Coach

Tom Hardin – Right & Wrong (318)

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Tom Hardin previously spent much of his career as a financial analyst in the U.S. In 2008, as part of a cooperation agreement with the U.S. Department of Justice, Tom assisted the U.S. government in understanding how insider trading occurred in the financial services industry.

Known as “Tipper X,” Tom became one of the most prolific informants in securities fraud history, helping to build over 20 of the 80+ individual criminal cases in “Operation Perfect Hedge,” a Wall Street house cleaning campaign that morphed into the largest insider trading investigation of a generation. As the youngest professional implicated in the sting, Tom was tasked with wearing a covert body wire on over 40 occasions to help the FBI bring down some of its biggest targets in the industry.

In a reunion of sorts, Tom was invited by the FBI-NYC’s office to speak to their rookie agents in 2016 and is now a global keynote speaker, corporate trainer and board advisor on behavioral ethics, compliance and organizational conduct and culture risk. Through rigorous self-examination, Tom took responsibility for his actions as a young professional, used the experience to transform his life and is now on an on-going journey into human behavior and why we sometimes make the wrong decision.

Tom holds a B.S. in Economics from the Wharton School at the University of Pennsylvania. Tom’s riveting life story is the subject of his forthcoming book, The Inside Story of Tipper X.

You won’t want to miss this fascinating episode!

To Learn More about Tom Hardin, please see the links below:

Website: https://tipperx.com/

Facebook: https://www.facebook.com/iamtipperx

LinkedIn: https://www.linkedin.com/in/tom-hardin-0952324/

Twitter: https://twitter.com/iamtipperx Business email: tom@tipperx.com

And now here’s Tom Hardin.

Full transcript below

Video With Tom Hardin – Right & Wrong

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Podcast with Tom Hardin. Right & Wrong.

SUMMARY KEYWORDS

fbi, people, trades, tom, thought, called, stock, tipper, gave, friends, years, big, day, point, industry, knew, company, finance, life, money

SPEAKERS

Mike Malatesta, Tom Hardin

Tom Hardin  00:00

Are you going? Okay, I’ll count down 321 And then we’re live. Sort of. Right? Yeah. All right, here we go. 321 Hey, everybody. Welcome back to the HOW TO HAPPEN podcast. So happy to have you here and I’ve got a great guest today. I’ve got Tom Hardin with me, Tom, welcome to the show. Thanks. Thanks, Mike. Thanks for having me on today. Yeah, it’s my pleasure. I’m so glad that Craig stanlon connected us earlier this year, I had Craig on the show. And he’s got a, you know, amazing story of his own. And read his book. He’s got a great book, and you will soon have a great book. We’ll talk a little bit about that as well. And let me tell you a little bit about Tom before we get started, and I’m just going to sort of tease it out there and then we’re going to fill it in as we go along. from 2008 until 2012. Tom was a little known us based financial analyst and he assisted FBI agents in understanding how insider trading occurred in the financial services industry, as the youngest professional later implicated in the sting, and known by his undercover moniker tipper X. Tom Wood It is excellent for 10 Or is there some meaning to the X or the the FBI just gave me the codename tipper x so I didn’t need myself that I just found out later. But they pulled it my firm’s name and x and the name they pulled it from there. So Kipper. Okay, okay. Yeah, by the way, way to go that was really good. So known by his by his undercover moniker tipper X, Tom was tasked with wearing a covert body wire to help the FBI bring down some of its biggest targets in the industry, the financial services industry, leading to the largest Wall Street house cleaning campaign of a generation. There were over I think there were over 80 convictions that you have a hand in, including your own. That’s great. Yeah. So you can learn all you need to know well, you can learn all you need to know about Tom here on this podcast, but you can also learn about Tom at his website, which is tipper x.com Tom at tipper x.com is his email. Do you want me to give you a phone number? Because you’re open for business? Right? Yeah, that’s fine. Yeah. So phone numbers 201-663-3957. I think you can find him on all the socials that his name Tom Hardin, H AR d i n. And Tom, I start every show with the same simple question. And that is, how did it happen for you? Yeah, so it’s a circuitous route. I think it’s entrepreneurship. I was a young analyst, as you said in the in the bio beforehand. And to finish that story I received for stock tips on insider information. And we can talk about what that means. Made some trades, I shouldn’t have broke the law. I got approached by the FBI on the street, asking them, they confronted me about my trades. I confessed to it. Immediately, they asked me to help them clean up the industry. So I worked undercover for two years for the FBI wearing a body wire, which of course we’re going to talk about getting people of interest to the FBI in these conversations, never had any plans to ever talk about my experience. I was in my 20s through my career way doing something very foolish. In 2016, the FBI called me, they said that was the youngest person they charged in these ad plus cases. And when I come share my story at the FBI in New York City, I did that, in a couple agents there gave me the idea to go out and share the story. So what I’ve been doing now the past six years, is serving as a usually compliance training, which anybody listening in a big company, you know, compliance training can be pretty dry and forgettable. So I come in as a guest speaker to company’s financial services, but just outside finance, to talking about my slippery slope and how it can happen in the industry and what we should be looking at inside corporate culture and that type of thing. So that’s where I am today. That’s how it sort of all happened. But there’s more to it than just just that. So. Yeah. And when when the FBI approached you initially, for the very first time time, we’re where are you? So I was dropping off some dry cleaning. I lived in Manhattan. It was 630 in the morning on Tuesday, July 8 2008. Dropping off dry cleaning before getting a taxi to the office. I stepped on the sidewalk and this guy behind me said are you Tom, I turned around to agents, dark suits, FBI wallets out, come sit down with us. So that was how I was approached by the FBI. They said that they knew I was down at my nephew’s baptism in Atlanta two days ago that weekend. So they had been tracking me for a while. And so that’s how it’ll happen on the street. And so take us from that point. Like, not from that point, but to that point, Tom. So you’re you’re on the Street in Manhattan. You’re 28 years old. Dropping off your dry cleaning. The FBI asks, like, like they didn’t know. Are you Tom Hardy? Yeah. As a matter of fact, I am. So how did you get to be on that street corner at 6:30am? Yeah, so I just going all the way back, I grew up in the suburbs of Atlanta, Georgia, was a good student public high schools, got accepted to university of Pennsylvania Wharton there in Philadelphia, so great, great University Club, an overachiever, great student athlete in high school, went to Wharton, so I was there in the late 1990s. For my undergrad. Everybody that I could have looked up to at that time, as far as a career was what’s called a hedge fund manager. These are individuals who are some of the highest paid people in the world and still are. So I think, Mike, when I was young, and in college, it was all about being driven by the money and what these guys were making. And I was really, really drawn to that. But the work also seemed interesting. So I graduated undergrad, started working in the hedge fund industry in 2000. There’s probably people who may not be familiar with that. So a hedge fund is basically a pool of capital, that’s managed by a hedge fund manager, it’s usually invested into public stocks. And it’s the clients are usually like endowments, or pensions, or that those types of large institutional pools of capital, where the hedge fund manager no matter what the stock market does, you’re supposed to be able to make money and outperform every year because not only can you buy stocks and bet that they’re gonna go up, you can also short stocks and bet that they’re going down. So some of my biggest trades that affected my career, just to give it a familiar example, when Google became public in the early 2000s, there was five yellow page companies that were both he traded. And if you really did the analysis, you could kind of figure out at some point, I want to own Google. And I want to be short, those five yellow page companies, because they’re probably going away at some point looking at a company called Google. So you could try it. You can make generational wealth on one trade like that. If you held on to Google for the next 10 or 15 years and watch those other Yellow Page companies go to zero. And that’s what people do. It was a very merit meritocratic, meritocratic, or organization in my 20s. If you pick the right stocks, you could be paid millions of dollars in your early 20s. So there was nothing like that, that I could ever ever see out there, like actually being able to be paid, and compensated when it was all quantifiable. So for me, there was no politics, there was no this or that it was an awesome industry, and I loved it. Just if something happens in Asia, how is that gonna affect the US market the next day and thinking through all the gyrations of that, for me in my 20s, graduating college was really something I was attracted to. And what about before you got to college? What were you thinking about? I mean, you know, getting into Wharton School at Penn is, that’s a big deal. You know, that’s always been a big deal. It’s a big deal. You have to be excited about that your parents had to be excited about that. But what were you thinking about what you were going to become as a result of being accepted there and your experience? Yeah, I wasn’t really sure what to expect a man was the first person ever for my family to leave the South. attend university. I thought at first I might major in accounting, just because my successful parent friend’s parents and my friends were tax accountants, you know, in Georgia, so that may be something I might do. But then quickly, my sophomore year, I really got into looking at investing and working at the student investment fund, where we had some money from alumni to kind of get us involved in the markets. And so I was pretty much hooked, you know, sophomore year following sort of the classic kid reading the Wall Street Journal, looking at the quotes and that type of thing and trying to figure out what makes stocks move up and down. And when you got there, so initially, as a freshman, you get there. Were you feeling like you belonged? No, not at all. Not at all. This was it was very difficult freshman year just to adjusting to the college life there because everybody’s valedictorian, top of their class. I knew that going in. But I underestimated as a freshman, how to manage my time in college, so and also because college was usually just to set pieces for your grade, it was the midterm and the final and so you only had if you screwed up one of those your grades, you know, really, really messed up. So it took me a while to adjust the test taking. I got a C on my econ one on one midterm, which everybody important took so I thought, Oh my God, my life is over. You know, I see I’ve never gotten a C in my life. And I called my dad and he was pretty straightforward. He’s like, Hey, you got it and just graduate, you’re gonna get a job. Let’s put it in perspective here with the best, brightest in the world here. Let’s hear they’re just graduated. And you can improve from a C right. Get a b minus next on the final so that’s yeah, that’s where I don’t think that’s unusual either because you you know when you come out of a High school it’s a small you know, you’re it’s a small pool, right? And even if you’re doing great there and you get into an elite institution, like, like any ivy or some are and a lot of others, right, it’s sort of it’s it’s like being an athlete and going to the next level, right, you are awesome. Right now you’re around a lot of people who are awesome. You know, instead of three or four people were awesome. There. Everybody’s awesome, right? Yeah. And it really raises your game, right? I mean, just those conversations at midnight in the dorm room with somebody down the hall from India, somebody from Australia, just talking about their their views of the world very much different than mine growing up sort of sheltered in Georgia and like, wow, that’s a big world I didn’t know existed. And so it was great in terms of just raising my game and, and how I prepared them for classes going forward. I improved my grades all the way that senior year, was able to get a great job out of that. And by the time you were a senior, we’re looking to graduate, where are you? How are you feeling? So as a freshman, you’re feeling this, you know, new, maybe uncertain, challenging. By the end, how are you feeling? I was feeling pretty confident, at least in my finance courses. I still got I got a C I think in marketing. So I was definitely not focused on the classes that were interesting to me. But I was pretty much certain as to where I was going to be. And I had a great summer internship before my senior year at an investment bank in Los Angeles, called DLj is no longer around, but younger people can Google that. Donaldson Lufkin? That’s right. Shannara. So I worked in a gentleman called Ken Wallace, his group out there who he has his own bank now moelis and company. So that was a great summer internship. And they gave me a full time offer. So going into senior year, it was so awesome to have that offer from the summer and sort of, again, DLj was just saying just graduate, you come back. So can imagine I dipped a little bit senior year, I think with my grades, because that was what’s what they because you had something and that was I was pretty confident. Yeah. Pretty confident of a job. Did you show the they’ll be just stay with this pen experience for for a minute. So you, you know you’re around all of these people are in the Wharton School, which is most of the students I guess, in that are looking toward finance or some finance related thing for their career business. We’re used sort of, I guess, this feeling like, oh, I want to make a lot of money, or you know, this, like you said, if I make this one, trade, it could, you know, generate, or produce generational wealth over time, that kind of thing? Was there a real focus on that amongst your classmates or colleagues or friends when you were there? Or was it not not so much? Now, there was a real focus on that. And maybe not so much the money, but the prestige of where you get that first job. So if you get the Goldman Sachs job, or the Morgan Stanley job, or the Blackstone job, like those were great starting points in your resume. So there was some competition around that in the interview process. And so it was a very, very competitive group of people that I think just helped me raise my level of performance and what I needed to bring to the classroom and to the test, and to the interviews and all that to be able to get one of those top jobs. Okay, so you started DOJ, what are you doing? And how does it feel and where are you? And yeah, so I started at DOJ, the fall of 1999. Investment Banking programs are sort of the Bootcamp for finance, where you’re putting in 8090 100 hour weeks, there’ll be the lowest man on the totem pole, you’re sort of doing more of the manual grunt work, like processing pitches for clients, and that type of thing. So I wasn’t using all the analytical tools I learned at school, but I learned pretty quickly like what you learn in school even sometimes it doesn’t apply to the, to the real world. So I was just doing the grunt work, putting in all nighters. There was one week where I put in three, all nighters over seven days. And what would happen is the Managing Directors, the senior people would leave at five o’clock in the afternoon and say, have this on my desk at eight in the morning. And sometimes you’re sitting around all day waiting to do something to get some work. And then it all comes at 5pm. So then, you know, you’re not going home. And so I did that. It’s usually a two or three year program where you learn so much. It’s a great it’s a great way to start your career, I would still recommend people interested in finance to take that guy that that bootcamp because it’s just going to set you up. You get 10 years of knowledge in two or three years, and then you can go do what you want to do. But I only lasted about six months after my third all nighter. A friend who worked at a hedge fund, which I just explained in Greenwich, Connecticut, gave me a call and said that they were hiring somebody to cover tech stocks for them. And so that was my January 2000 experience leaving Los Angeles with Santa just in Santa Claus. It’s a Santa and shorts are going to Greenwich, Connecticut when we have 18 inches of snow flying in there. To the airport in New York. So it was leaving the West Coast to the East Coast. And what was it that attracted you? Besides, you know, you mentioned, you know, having to work these all nighters. Which, by the way, before I go further on that you were kind enough to explain a hedge fund. And I talked about investment banking here and there on the show, but I don’t think most people have an understanding of what an investment bank or investment banker really is, or does. Can you help with that? Sure, yeah. So when the investment bank does financings, they do IPOs. So anybody watching, you know, the IPO market the last couple of years, you know, these companies, Netflix, or you know, all the big tech companies, Google Facebook, over 10 years ago, these IPOs the bankers put together, they’ll take a percentage of fee on whatever Facebook raised in their IPO, they take a fee. They take fees on financing, they finance acquisitions. And so what you’re doing is you have a Rolodex of clients. Usually the person at the top, the managing director is always pitching their clients, hey, you know, you should buy this company, it’ll increase your market share in this industry, or you shouldn’t look at offering stock because your stocks up a lot. So they’re always pitching their clients to try to get those fees on those transactions. So it’s a very transactional business. And there’s league tables every year, that ranked the banks based on the amount of fee revenue they generate. So always at the top is a Goldman Sachs or Morgan Stanley, those would be familiar names, publicly traded names that people might know. Okay, thanks for that and be so now besides the the all nighters and stuff, what? Because there’s lots of Well, I don’t know how many hedge funds here and you got Silicon Valley? I mean, you got everything out in California. So why, why come back to New York or to the east coast at all? Yeah, no, it was just, it’s something that I thought I’d probably do after my two or three years at the investment bank. So at first I go into 22, thinking, I’ll do this till 2425 and then go to the hedge fund route, learned a bunch, but I think I was just disillusioned with the sort of the processing grunt work I was doing, and I wasn’t patient. And the one person who ran this fund this hedge fund was, I want to say he was maybe 32 years old. In 1999, he made ungodly amount of money, you know, during the.com, boom in the stock market. And so I was looking at him as sort of like, maybe that could be me, you know, in 10 years at 32 years old doing that, too. It was a great sales guy, to me in terms of taking the taking the job, and just laid it out that I would sort of have complete control over my sort of future compensation. If I pick good stocks, there’s no BS about it, you get compensated for the stock should pick and I just liked it that that, again, that merit meritocracy, in terms of being able to move up quickly, at such a young age. It was sort of like there was 12 analysts at the firm. Sometimes I make the analogy of kind of like an NBA team where everybody’s expected to perform. If you don’t perform, you’re going to get cut, you know, but you’re also really well taken care of, at the office every Friday, like a Mazouz came around with the table here. I’m at 23 years old guy from Georgia, like getting a massage. So it was pretty cool perks, which I enjoyed and got to take cool trips. So the investment banks were also are, are quite our we were clients of the investment banks now because we traded through them. So they wanted our commission dollars. So I wanted some fantastic trips like twice to the Kentucky Derby, played flag football one time with Michael Vick, which was like, it was a crazy experience at such a young age. So it was awesome. I loved it. High Intensity again, though not not the 100 hours, but the 7080 hour weeks in terms of working all around looking at Asia, Europe, so I knew that but I also knew if I picked the right stocks and had some big years ago, I could start sort of that that path to generational wealth. So you said you were a competitive athlete and in high school, were you able to compete with Mike Vick on the football field? Yeah. Probably not. No, he wasn’t. He was in his prime. I think it was one of those. Each. Each team had a quarterback. I forget who the quarterback was. But okay, Mike, they didn’t have to throw it to us as people know, he just run it in. So yeah, well, yeah, he was good at that even with a bunch of pros around him. But But interestingly, to Mike got himself wrapped up with the dog thing, right. He ended up going I think he ended up in prison as well. Or you didn’t you didn’t end up in prison. You get parole, or probation. But Hmm, interesting. So with explain the office set up here, he said 12 analysts were you guys in like a trade on a trading desk where everyone’s sort of right there listening to each other doing that kind of deal, or was it different there? Yeah, it was very much like you describe it. So the 12 people in the investment team, I think there was two offices of six people each is sort of around like a horseshoe type setup with computers. The boss had the big office with people, maybe people have seen these screens where it’s like the 14 screen set up with every market in the world going you can just sort of Google hedge fund manager set up and see the setups that he had. I mean, it had to be at least a dozen screens just set up everywhere. And that’s it. Time, I think we was right before the flat screens came out. So we those big, those big tube screens with must have been at a ton of screens on his desk. So he had that set up. And then we had a trading floor downstairs, the trading floor was more the execution like he would yell down by yourself. And the people on the bottom, were more just taking the orders what we call more execution type people where the investment team comes up with the ideas upstairs. We pitch it to him. He grills us on that if he likes it, heels down the order. So that’s kind of how it how it worked in the past. Okay. And I forgot to ask you earlier your Did you? Did you? Were your parents able to pay for 10? Or did you come out of there with a lot of debt? Or how did that? How did that work? So luckily, I was able to get quite a bit of grant money based on my sort of financial needs at the time. But I was also able to get an ROTC scholarship that paid for tuition. And at the end of 1999, I wrote to the Pentagon, hey, Could I could I pay this back, I’d really like to go into finance, but of course of fulfilling my obligation if I can’t do that. And I guess because it was before 911, they would let people convert these scholarships to loans. So I converted that big scholarship to a huge loan when I graduated. But then when I came into this career record, pay it back over a few years, so I was able to finance it that way. But today, I think, you know, I was served, I think it’s a four or five year commitment, you know, with that in the armed services, but that’s how I financed most of most of my education. I see. So and the reason for that was you saw this sort of immediate future to make, you know, to make a good living, or was there anything else to it? It was really just I saw this immediate feature of why they wanted to be doing. The Air Force wouldn’t had me as a finance officer coming out of Penn, which wasn’t as glamorous, I didn’t have the vision, I needed to be a pilot. So I didn’t qualify sophomore year to be a pilot. That’s what I really thought I might do if I had to serve in the Air Force, who doesn’t want to be go for that. And I didn’t have the vision necessary or the hearing actually, I have had severe surgeries as a child over the years on the tubes and my eardrums, and it just wasn’t up to par that you need. So they said, Okay, Tom, you’re gonna be a finance officer. And I asked them, you know, can I just write so and so and ask them if they’d be able to convert this to a loan for me? And they said, Yeah, they do this for a few people every year, it’s no harm and asking, and they were able to do that. So I became sort of a big loan, like we students have today, just graduating with a lot of debt. So okay. Yeah, I’m glad you I’m glad I asked that, because I probably gets a little bit too, you know, what’s your, what’s going on in your head, you know, you take this DLj job, and you get off this hedge fund job. You know, you were to kill a lot of perks to a lot of you mean, it’s an environment where you start to probably feel like, maybe he’s not like, Hey, I’ve made it, but then, you know, there’s something special going on here. Like, you know, it can get to your head, right? Yeah. Oh, absolutely. It gets to your head it gets with if you have a couple big years, and you’re 25 and you’re able to kind of do whatever you want. And you know, there’s the vices and all that stuff that can creep into life. So definitely, that is a young age. And so you kind of sort of these credit points start to feel like, Oh, I’ve already made it and I know everything and I think that crafted a little bit too. Yeah. Yeah. So I mean, you come from, you know, modest, modest family in Georgia, you know, you come to the, well, maybe Philly is the big city to some, but it’s certainly a bigger city. Maybe it’s not bigger than Atlanta. I’m not sure how the anyway, you, you come you do really well ROTC, you’re able to get your way out of that get hired for big job. Then another big job, and life looks pretty nice. Looks like you’re gonna hit it out of the park. Right? Yeah, it looks it looks amazing. I met the woman that year that I eventually would marry when I was 27. And like, I mean, everything was on track. If there was if I You’re supposed to sort of go through life and check all those boxes. I mean, it was it was on on track. Until it wasn’t once Yeah. Until it wasn’t talking about. Yeah, yeah. And then yeah. And then of course, that manifests itself on July 8, right. July Yeah, yeah. So a calm so yeah, just like just to fill in those details. I knew that other players in the industry at this time. So I got this job in Greenwich. Immediately. You know, my boss is friends with a guy named Raj Rajaratnam who is one of the biggest sort of kingpins charged by the FBI. He just got into prison. I think last year just read a book. So I knew what he was up to. He would just talk about trading on inside information. Other people would talk about this, how they would get tips from contacts inside companies. And so inside information is to clarify that out Um, it’s illegal. If you trade a stock if you buy a stock on information that’s called material information. So if it’s material enough to move the stock price, if it’s nonpublic, so if it’s not available through Google or through newspapers or whatever, just if it’s not available to the public. So those are the two key sort of areas. And then the third is if it’s if it’s obtained in a breach of duty. So if somebody at the company breached their duty as an employee of that company and leaked that information, then so legal insider trading, so give an example if I walked to Starbucks here in Westwood New Jersey, and said, What are your sales numbers this quarter at the store, and they told me it doesn’t move the stock? It’s one store of 1000s of store, if I fly to Seattle, and play golf with the CFO of Starbucks and say, Wall Street thinks you’re going to earn $1, this quarter? And he says, No, we’re going to earn 80 cents. The night if I own Starbucks, and I call him and say to my wife, sell our Starbucks stock, it’s going to be a bad earnings report. I’ve actually just broken the law, I could go to prison for that. As I see. Right? The CFO, as her see the CFO in this particular night. Right, exactly, exactly. That’s sorry, he breached the duty, but sorry. Yeah. Okay, and so I knew this was going on. Yeah, go ahead. And when you said that, by the way, hold on time when you say he did you mean your boss at the hedge fund? Or did you mean rush? I know my boss at the hedge fund had friends, who were also hedge fund managers that were getting this information and trading stocks. I knew it was going on Mike. But I never really felt at that point, age 2223 24 that I needed to cross that line and do that that was already doing quite well, as I said, you know, making a name for myself. There was one month where I got they even gave me a trophy one month, because in June of 2001, I was up every day of the month, except for two days. And so my boss actually had a little thing after work and presented me with a trophy, like in terms of like the hit rate was unbelievable. And so I was doing great. And then sort of get getting through my career, I took that fun close down. We had a bad year in 2002 in the tech stock crash. And so my boss had made all his money he wanted, he just closed it down. I took another job. And sort of into my late 20s. Like 60% of companies that were acquired, had these unexplained spikes in their stock prices. So if you saw on the news company, even the buyer of Company B, company B stock price would be going up weeks and weeks before that news came out. So this is really going on big time in the market, the information was leaking. And in my second job, just to backtrack, so my second job was just me, the boss. And that’s it. So now I have I actually own a piece of this fund. So I’m now a partner, I’ve worked my way up at 28 to be a partner in a hedge fund. So again, on the right track, we actually lost money in the first quarter of investing for clients in 2006. It shouldn’t matter because we were investing with a five year horizon. After losing money in the first quarter, my boss came into my office close the door and said, Tom, I know we’re investing for the next five years like the Google and Yellow Page tray, which is going to take years and years to play out. But we just lost money in the first three months. Tom, we have to start looking for shorter term opportunities to make money every month. And he closed the door. But Mike, I didn’t ask the question. Do you mean anything goes at this point? Or what? What do you what do you mean by that? I didn’t ask clarifying questions. And so I took that to mean like, hey, if I get one of these hot tips, like these other guys are getting, it’s okay to trade. And it happened a few months later where a woman who had worked for Raj Rajaratnam called me and said she knew about a deal happening where a company was going to be bought by a private equity firm next week, like this day, this price by this private equity firm. And so I got that tip. I didn’t trade on it that day, but I shared it with a friend at another firm he bought it keeps sharing it with everybody his firm, they’re buying the stock he calls me back and said Tom, did you buy some? And when when a person commits a crime usually employee fraud it’s called the fraud triangle. There’s usually three reasons there’s a need to commit the crime, an opportunity or a rationalization. And Mike I can tell you I just rationalize it. I said all these other guys are doing it what would I hurt buying a small amount of stock, and I bought a less than 1% position in our portfolio in this stock, thinking it’s such a small trade I would never be caught for this. If these guys are making millions of dollars I would never be copper this small trade. I did that same fact pattern four times through 2007. She would call these small trades. And then fast forwarding to July of 2008 the FBI was in my face about those four traits. So this woman Tom, I believe it’s roomie con is that those right? That’s right. Why are you Why did she call you? That’s what the FBI asked me eventually like because it’s usually a Person tips another person, they know they’re probably going to get reciprocation of that tip back, like, Okay, I’m going to give you information, right? Because you’re gonna give me information. Maybe next month, we sort of Scratch, scratch each other’s backs up for the quid pro quo. And so I think she was 20 years older than me. She only talked to a few people in the industry, she wasn’t that likeable. And so when I saw her at conferences, I would talk to her. And so I think she kind of latched on to me as somebody that she could mentor. She’s 20 years older than me. And so she called me kind of as a favor, here’s a piece of information. She said, Tom, you know, you’ve made me a lot of money over the last few years, every year, I’d say, Here’s my, here’s my sort of stock of the year, I think it’s going to do this or that. And here’s why. She told me I made her a bunch of money. So it was kind of a gift to me, like, here’s something for you. We had talked before about other people in the industry blatantly doing this. And I didn’t expect it to ever fall in my lap so explicitly is that like, it literally fell in my lap with a phone call. So I didn’t trade the first day I thought about it. I talked to my friend, sort of as a sounding board. He’s all in. So I think that influenced me a little bit like, Oh, he’s really loading up on this, which again, I could be charged for insider trading, just by sharing that before I even touch like I didn’t even require even trade it. I didn’t even trade the stock yet. But because he’s buying stock on the information I shared, I could have been charged at that point. So she shares it with me. It happened three more times. On the third trademark, she actually called me and she said, Okay, this is the third one, the guy that’s giving me the giving her the information once $15,000. So she’s sort of setting me up, I think you’re for this kind of cash payoff. She said, Tom, can you write him a check? I said, No, I can’t write him a check. That sounds illegal. I started to freak out a little bit when she said she gave this guy my name. Like, I don’t want to be involved in this. I’m just buying a little bit about the stock. Like I don’t want to know about your here’s what you’re doing. But I called my friend who I accept and said, Can you pass the hat around? He gets $15,000 in cash together, give it to me. I’m literally going through the border the Airport in New York to give it to her in California, made it through security got out to California gave it to her. So it started with the first trade but by the third trade. I’m literally carrying cash to the airport, my body to give that to her. So there’s no I’m all in at that point. There’s no going back. So a couple of things. What’s the amount of time between the first one and the third one? Not much to say first of all things? What was a? Yeah, the first one was up March and the second the third one was probably July so so pretty quickly. Last quarter number? Yeah, pick a quarter. And and when, when she told you about the first tip, how were you sure that she had insider information? Like I’m trying to connect with that? Because it feels to me like there’s some plausible deniability there. You’re like, Hey, I don’t know, you know, this is roomy, I wish she’s not involved with the company. I don’t know how she knew this. So it’d be my excuse, if I thought if I would, if I was ever asked by my boss, like, hey, you know, I talked to her. She’s literally full of rumors, she was sort of a rumor monger always calling with, Hey, I’m hearing this Silicon Valley, I’m hearing that most of those rumors aren’t even true. So, to your point, Mike, the first time I thought, you know, this sounds like very specific information. But how do I even know like, I’m starting to convince myself. I don’t know if she’s even talking to somebody who has this information. But why not like, I’ll buy the stock. If this event doesn’t occur, I’ll just sell the stock. It’s not that big of a deal. It’s a small position. And then one day, in front of my Bloomberg screen, which is all the stock, the blinking stock screen terminals that we all had, I see that the stock she told me about was halted for trading. And word for word, exactly what she said. So I’d love to tell you that I panicked and thought, Oh, my God, this has happened. This is actually happening. This is not a rumor. This is exact information. But I hate to say it, I got it. I got like an endorphin rush like, Oh my God. Now I’m part of this in group and the industry who knows about this information. Like I never thought I’d be part of this. I don’t have these contacts. But all of a sudden, here I am playing this game. The next conference, I went to the next week where I knew these other guys were doing it. I told them I knew about this deal. One of the guys said, Tom, you don’t know about these things. You know, this is our world, Tom, Tom Hardin actually does real world real work on companies. I said, No, I do that. But they also I can also do this too. And I know about this next one come in a second one. And one of the guys sort of put his arm around me and said, now you’re part of our group. So I think back in my 20s of not being a part of that elicit in group. And then once I was part of that group, I kind of felt like I belong, which we can all play the psychological games with ourselves. But I think looking back now plenty of time to reflect on this. That was part of it, too. It wasn’t about the money on these four trades. Personally, I made $46,000 which in the context of a career, you know, is nothing in terms of terrain a career way, but I think it was more about having that status and not being part of that in group and you’re first of all, had anyone called you as you know, as blatantly with as, as, I don’t want to say play. It’s as detailed of information as as Rumi did before. Thank you. We’re just like, No, not gonna do it. No. I mean, there was always rumors like, Tom, I’m hearing this about Intel semiconductor, I’m hearing the most about Qualcomm semiconductor company, but it was never like, hey, this company is gonna buy this company in a few weeks. Here’s the price. And here’s the date, like, even somebody’s not in the industry, you can kind of at least surmise that sounds, if not illegal, I mean, close to the line over the line. So that was the first time and so that’s why I waited, I think, like, Okay, this sounds illegal to me. So let me call my friend, and get this with him. And he’s excited. And he’s all in and he tells his entire firm, and then is we can rationalize anything, I thought, Well, these guys are gonna make millions of dollars on this information I just gave him, I should make a little something too. And I could buy a stock in the portfolio and not have to talk to my boss, as long as it was less than the 1% that we manage for clients. So that was kind of like, the lacks control that we had in terms of me being able to buy a stock in the portfolio to because it was so small. So I had several small positions where, hey, I’m just doing research boss, I just bought a little bit about a stock, I’m gonna do more research. So under the context of just me starting to do research, that’s how I got the stock in the portfolio. But the boss also never asked the questions about these four well timed trades. And we could write that too, at some point. Well, yeah, so I want to touch on that now. So because you’ve got this older woman who’s experienced, right, she’s offering you something exclusive, right? So you might feel like, Oh, well, you have a good, we have a good relationship, right? And she’s trying to help me out. And then you share it. And at least after the first couple of trades, you it creates a club for you, right? It creates like, hey, top, my status just got elevated with these people, or at least I think it did. Because of this, because of what I’ve done, right? It’s kind of so I’m kind of I’m kind of the hero, and then you can further rationalize that. And when I say you, I don’t mean just you, this can happen to anybody, right? Because then you can further rationalize it by saying, hey, everybody’s doing it. What’s the harm? This is actually, you know, being in the club is part of what you that’s one of the goals, right? You know, or whatever. And, and all of a sudden, you’re a couple of trades in and then or you’re a couple of whether it’s you couple trades in your a couple lies in your a couple of receipts in your a couple of whatever’s in and all of a sudden, it’s like, Well, I’m here, so must be okay. Right? Just right. It was just, yeah. Yeah, you can still see it going on in the market. Even after my fourth trade, which is the final trade, it was only the final trade because the information stopped coming. I mean, this could have been a multi year conspiracy, where it was for a year for five years. And what if it was 20 trades, right? The FBI approaches me on the street, I’m probably looking at a lot of jail time because of the amount of money I would have made by them. So in some respects, I might be even lucky that the FBI stopped me after four trades and say, Hey, we know what you’re doing. Yeah, you’re gonna cut it out now. And so, well, plus, you have a lot going for you at that time, right? You got you know, a working for a firm the boss, you know, basically set a, you know, turned up turned a blind eye, whatever, you’re young, you know, being influenced, you could be influenced and all these things. What, but the, well, first, I ask you why? Why did it stop? Why did did, did someone get to her? And then it’s stopped, like, maybe she was already like, Oh, I’m, I’m caught up in this so she couldn’t give you. I think somebody’s got to her maybe so either the FBI can bring the criminal charges, or the SEC is the regulator that can bring the civil charges. Okay, I didn’t know this might. But if this was like not made public until she was arrested, that she had actually already been charged for insider trading in 2001. That was never public, because they wanted to use her as a cooperating witness against Roger roger, all the way back then. And after 911, the FBI kind of dropped that case, because they were focused on counterterrorism resources at that point. So I didn’t know she was already a convicted felon. And I’ve only heard secondhand through other FBI agents that they knocked on our door. And they said, We can’t believe you’ve done this again, like who does this crime? Twice? There’s probably some psychopathy there. And here’s the longer you use the last time who did you tell this information to? And I’m guessing at that point, Mike, she gave the FBI you know, my name, Hey, Tom Hart, and Raj Rajaratnam like, This is who I tipped. And so she called me at the end of 2007. She was panicked. She told me that she had been approached by the regulator, the SEC, asking her about one of the trades, what should she say? And I think at that point, she was probably wearing a wire on me because she was trying to get me to tell her what she should say to cover up the crime, which that would imply that I knew that we were doing something illegal as I learned with the FBI leader, how to get people to talk about these corrupt trades, and so I think she was probably wired up on mute that point. And how did the for you? How did the self justification that we’ve talked about how did it change when you’re asked to pay money and you had to actually, you know, get on the plane money and deliver it, that that sort of changes, it seems like it’s one thing to justify a couple of mouse clicks and buy some stock and you’re not hurting anybody, but to actually have cash on your body and going through an airport. That’s a whole nother level. And to be honest, I look back at that and think what was I thinking was at the thrill of actually doing this and going through the airport and getting through, I think it was some of that. But also, I just panic, because she told me that the guy who was giving her the information knew who I was, I wasn’t thinking clearly at all. Like, I could have stopped there and said, eff No, I’m not putting, like getting together and going through an airport. We’re going to stop this conspiracy. Now, what is this guy going to do? Go to the FBI and say, Tom isn’t paying me my bribe. So I could have stopped it there, Mike. But I wasn’t thinking clearly I panicked. I called the friend and he gave me the cash. So went through the airport, made it through the TSA screening machine. I’m not sure how I actually made it through. I don’t think I went today now, but at that time, made it through and actually got stopped. So when I was boarding the flight, there was two TSA agents. They’re checking people’s carry ons, which I’ve never had happened again, ever on a flight. And they actually checked my carry on. They flipped through the cash. And they just told me to have a nice day. So they never said anything. But I sat on my seat in the plane and thought, at that point, it sort of hit me like my God. What am I doing like this? Yeah, this is I’m way over way over my skis here. And then, of course, that jumps to another level at the dry cleaner, right. So you get so we’re finally, like, finally back there. Yeah, right. Yeah. So it was important to hit all those high points. But on July 2008, they’re on the street. They know about me visiting my nephew in Atlanta. And my first thought was, oh, my God, my dad’s gonna kill me, you know, what’s he going to say? Because I’m still very close with him in my 20s. All he could talk about was my success Wharton School hedge fund. And my thoughts about this, and I have to break his heart. And I thought, Oh, my God, my wife is gonna leave me she had no idea about these four trades. I never talked to her and thinking back, if I least voiced this to her, and she was not my industry, I think she had the moral compass to would have been saying, like, what are you thinking, doing something like this, you know, but I didn’t talk to her. And then I thought, Oh, my God, it might be going to prison. So it went from dad to prison first, that was fine. It wasn’t personally Oh, my God, it might be going to prison. But I was like, Oh, my God, I’ve just I wouldn’t have to, I’m gonna disappoint so many people with what’s about to happen in my life, but then then went to Oh, my God, it might be going to prison. I started telling the FBI, everything. I didn’t make them play any tapes. The FBI got excited. They were writing things down. I even told them about the cash payoff. They got really excited. They looked at each other and wrote things. So I didn’t know what they knew. I wasn’t under arrest, I could have left but I wasn’t I wasn’t thinking about let me call my defense attorney. I’m not thinking about ever being caught for this because I was making such small trades. I never thought I’d ever get caught. And I didn’t think I made a lot of money. I didn’t even know the money I made. And so I had to pay it back. And it was sort of shocking to see Tom throw away his career. 29 years old for $46,000. Like, that’s what I paid back. I told the FBI everything. And then they said, Tom, you know, I’m a small fish and the bigger sort of scheme of these cases they’re building. They showed me a web of insider trading tipping charts and names that were all whited out. They had two big targets at the top of this chart. So I assumed one of those guys was Rajaratnam. The agent gave me his card. I said, Should I talk to an attorney before I help you guys. And when the agent said, you know, we’ll let you know when you can do that. So they’re playing by their own rules, too. They’re just trying to build all these cases, like I should have known. I’ve watched enough law and order that I could at least call the attorney after that and go through what happened. But I didn’t later that day, I went to the office, my face was white. But it was the financial crisis. So my face was white every day, it was 2008. We were not doing well. I went to St. Patrick’s for a confession that actually that lunch, I just converted to Catholicism. Two years prior, my wife was Catholic through our CIA. It was a great time for a confession talk to one of the priests at St. Patrick’s there in Manhattan about what happened. And he said, Tom, it sounds like you know, 99% of your life, you did the right thing, but 1% of your life, you’d really screwed up. But he said, you know, don’t let that 1% of your life here. Define what you’re thinking about yourself what you’ve done. I don’t know if I was suicidal, but I was as depressed as I’ve ever been in my life. And he said, If the FBI has given you a chance to kind of start making amends, you should do that. So I left St. Patrick’s called the FBI and said, I don’t understand what it means to help you build cases. What do you mean I was so naive, and they’re like, Tom, you’re gonna have to wear a body wire for us. Yeah, okay. And that had to be a you thought carrying cash through the airport was freaky right now. So yeah, so I’m like, What’s, what’s the body wire? I thought it was something taped to my chest. At the time. I’m sure the technology is different now. I’m pretty sure it is. It was the size of like, we had blackberries and they had these like one inch battery He’s in the back. So it was the size of those batteries in the Blackberry, it was in my front pocket address your pocket. And I go around the conferences and other firms or meet people with for coffee, getting them in conversations about, perhaps one time they traded one stock on inside information. I didn’t know whether they had or not, because I wasn’t privy to their actual training. But I knew people by reputation often know that like, Okay, this is a guy who’s probably engaged in this behavior, maybe a disciple or former employee of some of these bigger players in the industry. Let me get them in a conversation, build a relationship. And some of these guys, I’m on my 20s, they’re well into their 40s. There’s some trillionaires. Like, they’re just taking the meeting as sort of like a mentor meeting. And I told them, I had those four trades, and how did they do it? And eventually, people would start talking to me about how they got their illicit information. And so I wore a body wire like this for two years running around getting people in these conversations. So that’s two questions. I’ll start with the confession. Now with the priests, but the confession with your wife, when did that happen? That first confession. So the FBI approached me on Tuesday morning, they told me I could only tell my wife about this. I couldn’t tell my parents or anybody else. So I thought, How am I going to do that? We had just gotten married two years prior, I thought, oh my gosh, she’s gonna leave me. I waited till Friday. So those three nights I was having bed sweats, panic attacks, getting up. So I think she knew something was up. I mean, I usually keep it light, like the joke around. And then Friday after work. We had a just a glass of wine before getting going to dinner, you know, young couple in New York City, how was your week? I said, Well, let me go first. And so sat her down and told her what happened. And I think she was so shocked. She was like, Can you see that? Like, it didn’t process the first time. And I said, I said it again. And the way she took the mic, she’s like, You didn’t do anything against me. I think she was thinking it could have been something worse in her mind, maybe infidelity would have been worse to her. Even though it’s on a felony, maybe that would have been worse to her. But she’s like, she went away for a while then sort of came back and said, Look, you got us into this, you’re gonna somehow get us out of this. And so 85% of marriages would have ended right there. I mean, anytime a spouse gets a felony, it’s usually, understandably, she didn’t marry Tom Hart in the film, she married, who I was before this, so right, and we didn’t have kids. So it’d been very easy at that point for her to hoist the sails and just say, you know, I don’t even know this guy. Like, this whole thing was going on the four trades. I didn’t know it was happening. But it wasn’t easy. But she stayed with me. And so that was very important. I think in terms of my mental health, again, probably not suicidal, but had she walked out the door. I don’t even want to think about, you know, what could have happened to me? So how did it go? And if it did, and for how long? Did it change the dynamic of your relationship? Yeah, no, it was definitely a wait. She was more worried for my safety at one point about me actually wearing the body wires, even more so than I was, I think, just sort of this idea of it’s not organized crime. But like, if I’m wearing a wire in front of somebody who has significant means to cause harm to us, like, yeah, that’s something that we should talk about. So she was more worried about that. And just, I was, I was just so difficult to be around, I was under stress, she was obviously under stress, thank God, she still had a job. At that point, she actually worked at Lehman Brothers, so she would lose her job. A few months after the student with the Lehman Brothers downfall. So crazy time. So at one point, I’m just thinking about this now for the first time in a while we were both in the work 2009. So that it did not it did not look good for us. We were in the middle of actually buying a house we decided to go on with our life, actually started a family. So we had our first daughter, the fall of 2009. She was born four days before Raj Rajaratnam was arrested October 2009. So we decided to go on with our life, moved to New Jersey, move out of the city, move away from all these people, and start over again. So but it was a lot of like, just sort of days and days of not even talking to each other sometimes, or she would ask or how we volunteered about what I’m doing. But sort of she had to process it her own way. And so talk to her parents and friends and that type of thing. And during this time, and I’ll get to the wire separately, but during this time, so after you’ve been approached how, like, as you’re walking through life, day to day, are you thinking everybody’s looking at me because they know where are you thinking how are you? How are you dealing with it? Because you gotta you got to face to save at work, right? You got to face to save. You know, your friends, your neighbors, you know, you’re caught your classmates so all these people like how are you? It’s a secret so that you have to keep Yeah, it first it was a double life because like the first year of my cooperation, I was still going to work going to the office again. It’s 2000 ain’t the worst year for the stock market 75 years seven. So that’s not going well. My performance at work is terrible. And that’s just stinks. And then I was actually obviously, kind of able to separate the two like, I need the FBI. For lunch, they talked about the target that they wanted me to wear a wire on, we talked about that. And I go back to work, but I was I was definitely not doing a good job with a lot work. I wasn’t even I sort of checked out. And I think my boss could see that too, towards the 2008 just wasn’t there. And our meetings wasn’t picking wasn’t even focused on things. And so I ended up leaving, just resigning February 2009. So a few months after that, because I thought my name would actually become public at that point, any day and it didn’t become public for another year. So I was able to manage it. Okay, but when my name became public, my that’s when I thought, Oh, my God, like January 2010, where it was the front of the Wall Street Journal is Tom Hardin, CNBC runs those little ticker headlines, you know, across the bottom of the screen all day, Paul, it’s just make it stop every minute. Tip or exit in a fight is Tom Hardin. My phone’s ringing off the hook at this point, we’ve had our daughter in 2009, I was a stay at home dad, my wife actually found another job pretty quickly after Lehman. So thank God, she had an income, but she could go to work. I’m staying at home reporters are knocking at the door. At this point, I was so out of shape, I was well over 200 pounds, just letting myself go. Holding my daughter, she’s crying, like people are calling. But it turns out, it’s a 24 hour story. So the next day, there was something else that we covered, but just that that that first day was terrible. Yeah, then there’s probably sorry, there’s probably gaps, you know, and then something else runs in your dam. But it’s gonna be just one day right? Back in the press, because in some of the authors are asked it and they’ll say also,

Mike Malatesta  51:56

excuse me. They’ll say, I’ll just cut down

Tom Hardin  52:05

three to one. They’ll say also, Tom Harden was involved with these other cases. And, you know, so Tom started back in the press. And once my name became public, Mike, I realized like anybody that knew me at all, in any professional capacity, had to say, Oh, my God, I know this guy, Tom Harden, like, if somebody knew me back from Pat, and we talked about stocks occasionally, or saw them at conferences, and they were never involved in any of this. Because they had emails from me, their compliance team would say, why the heck what’s going on. And of course, they had no idea. They’re like, I didn’t know this guy was to practice and working with the FBI. So they would completely disassociate any relationship with me anymore, which I can’t blame them. And they weren’t told to do that. Like, like, you know, anybody in these cases dropped that relationship. So I understand that, but I lost, I lost count at least 50 Facebook friends 5060, LinkedIn connections, you know, it’s, they have some of them, come back now. Have someone come back now. Like, in that day, I got four emails from friends from Penn, who were not in the industry, just saying, Tom, I saw your name. Like, if you need to talk about this, let me know. And so, not surprisingly, you kind of figured out who your true friends are then, right? over 10 years later, those are some of my four best friends now. So. So Tom, you’re wearing this, you’re wearing a wire, you’re doing all this cooperation? So I’m sure there’s like tons and tons of interviews, tons and tons of sit downs, you know, of course, wearing the wire and I’m thinking to myself, what, like, is it all about self preservation? Is it about being a do gooder, you know, saw, you know, helping the government, right or wrong? What were you feeling when you were when you agreed and when you were doing this? Yeah, and a couple of things. I kind of felt like the FBI was giving me a chance to clean up the industry. So do good or part of it not not really like a whistleblower, but sort of a quasi whistleblower situation, but not because I was compelled to do the right thing, because I was sort of forced, because of what I had done. But also I knew that these other guys, some of these guys, businesses was doing this 100% of their trade. So I kind of felt like, if the FBI has given me this chance to clean up the industry, I should help them out. But also it was self preservation. Like I should just take the FBI orders, and maybe it’ll all work out. I told myself stories over and over. I thought the FBI would hire me one day, which doesn’t make any sense. You can’t be a professional cooperator. Oh, I thought like maybe maybe they’ll drop the charges. Maybe I’ll do such a good job one day, they’ll be like, Tom, you’ve done such a good job and then like, forget about it. Yeah, I can. You can imagine what my lawyer said. He’s like, What do you wait a year? Me? Who was your attorney before me? I said to my lawyer, I’ve never spoken to an attorney before. He’s like, how many times you were a wire Tom at that point was 47. He was like, did you make millions of dollars? Are you like the target of this big conspiracy and like no, I made 46,000 And he’s like, Tom, you’re supposed to call me the first day the FBI approached you. I’m like, sir, this is my first time doing this. We’re just taking orders. And so he laid it off and he was like, the FBI is not dropping the charges. They’re gonna use you until they can. And once they can’t use your your names, we’re gonna come out and once they couldn’t use me anymore, literally the next day, that afternoon, the next morning, it was all over the headlines, so did to your attorney put the kibosh on that or it was a war. And after that, he said, Thompson a lot for you guys wearing the wire so many times, they wanted me to wire up on two friends. I told him the fourth trade, who were really great friends, and I drew the line there. So these guys are great, great friends, I’m not going to do that to them. I’d rather the president if I have to then do that. And my lawyer said, I think you’ve done enough to to be able to stop here. And so I told the FBI of dying and literally the next day, you know, it’s all in the headlines and I had to call my brother he worked at another hedge fund. I did tell him about this. You can imagine how that went with him here. He covered healthcare stocks and he was never trading any my stocks anyways. But the conversation that he had to have with his compliance officer and his boss, like, Okay, tomorrow, my hardens going to be all over the press, and so it’s going to be a bad day for him. So the amount of people that it impacted down the stream I didn’t even think about when Tom Hart is tipper X. I’m just concerned about telling my parents and my in laws, but anybody that knew me is like, kind of freaking out like, oh my god, this is just bad. Even though this guy, you know, where did the tip or x tip for The Wall Street Journal come from? Did it come from the government or like the the initial one before you had been before you stopped cooperating? You were still cooperating at that time? If I’m cooperating before, my name is in the Wall Street Journal. Yeah, like and, you know, you mentioned front page of the Wall Street Journal where you were still cooperating at that time, right? We’re operating Yeah, okay. I was still cooperating up until my name was released, and I was no longer able to cooperate, obviously, after that. So, Roger Ratan was arrested a few months before my name came out. So in 20 people arrested that day that he was there. And so in the Wall Street Journal, they had all these names and there was one name in the middle called tipper x. So I was still working undercover for the FBI. And they didn’t even tell me that my name was tipper X. Like, I was reading The Wall Street Journal about the all the arrests, and I told my wife, I think I think I’m this guy, Super X. And so, CNBC, you’re in the story who was tipper X? They did mention me. I mean, nobody. Oh, okay. Yeah. So you were like the modern day Deep Throat? Yeah, you were Yeah, exactly. The tipper X. Yeah. And then I think at that point, the earlier question too, I started going around a little bit, like, looking over my shoulder people must be odd to me, like they must know that I’m tipper x, but apparently not, you know, it was kind of shocking when it when it came out. Who tipper X was in these cases, because I was just, I was the youngest guy of the 80 people they charge and so how would that even be possible? You might think it’s more of a seasoned guy who would be the guy who’s in the middle of all this. So how many times do you have to wear a wire before you’re, like used to time? Like, I’m trying to think, before you’re used to it? Like, how many times oh, yeah, probably doesn’t. Okay, so if I, if you’re like, if we’re, like, if you’re a target, and then I’m meeting with you, I’d say, Hey, Mike, remember a few years ago, or, you know, a couple of US stocks? I think you trade pretty well, Mike, like what would you say if you were ever asked as to why he made those walltime trades? But if I’m asking you such a pointed question, he might look at me and think like, why is this young guy who I don’t really know that well ask me about these trades were a few years ago. And so there was usually this awkward silence until the target would talk. I would feel the silence and because I’m so nervous, I must think now you’re on the me like now the wire must be huge to you. I feel the silence. Oh, how about how about the football games this weekend or whatever, just totally change the subject. The FBI would play that back and they’re like, Tom, like you’re not doing a good job. Again, they’re playing their scare tactics on me, Tom, if you can’t do this, it’s not good for you. And again, with them, like guys, it’s my first time ever wearing a wire, okay, like, cut me some slack. And so eventually, they said, even if that awkward pause after my question is a minute, I can’t I have to let the other person talk first. And so I got very good at being comfortable with silence. And so you know, those 30 seconds, which feels like forever, then the person will usually start talking. They look at me as like somebody that they wanted to mentor, younger professional who was on their path, and they would usually start talking about either a contact, they had given them information, so it was kind of shocked to see how many people would start talking. I guess I looked trustworthy or whatever, but Right. Yeah, but it’s a good negotiation tactic as well to say something Shut up. Just wait. Exactly, exactly. That’s right. For even as a professional speaker, you know, making a point. Oh, sure. Giving it a few Pause, pause. But yeah, yeah. Well, I find it super interesting that you’ve sort of embraced and adopted the tip or x name, which could have easily been something you want to run away from, right? I don’t want to I don’t want that at all. But you’ve and it probably took you a long time to decide to embrace that I’m thinking but now you’ve embraced it. And you’ve you know essentially done what what what a lot of people do that make them miss have made mistakes, you you, you own up to the mistake, I’ve done this, you own up to mistakes, you pay your dues, and then you get on with life without you know, and you this mistake doesn’t define who I am. It’s a part of who I am doesn’t define who I am. I’m willing to talk about it because it could be helpful to you to know that I’ve had this experience and you may have had some, lots of people have had the experience you had you had they just never got caught. Never, never, never got caught. Yeah. And they can walk around like, oh, Tom’s, uh, you know, whatever. But they’re the same as you just not everybody gets caught. And so to your point, them comes out January 2010. I’m not actually sentenced until February 2015. I’m sentenced to no prison because of my cooperation. I’m still a convicted felon. I changed my life around I lost a bunch of weight. I got into running marathons and ultra distance marathons. And so my first podcast interview was on the ritual, podcast, health and wellness podcast 20 2015 Right after I’m centons an FBI agent heard that story and how I turned my life around. And the FBI later called me in 2016, to speak about my experience cooperating because they said they were building some new cases again, and I asked the FBI, why the heck are you guys doing this again, and they said, Tom, every every eight 910 years, it’s a new crop of people in the industry, we see the same behavior, you can rationalize anything. And I spoke at the FBI and the FBI gave me the idea to go out and share the story. I was always an introvert, analytical guy, Wharton, I love my spreadsheets and my screen. I don’t like being in front of people and especially talking about this story. But it’s a sort of the the 1000 hours once you do it and do it over and over again. I got very comfortable talking about it. And the impact I saw I have with people especially what some of my first speaking engagements were speaking for free at any business school I could find that would have me in the New York area or went up to Boston, I went down to Penn Drexel anywhere I could just drive to and tell the story was students was really rewarding because they kind of saw themselves in me. And I think what happened was I couldn’t walk in his slipper actually think when is this guy going to be some caricature of some criminals and villain, and when they hear the story, they’re like, that could be me or when professionals hear the story to your point, but for the grace of God, it’s not them on the stage talking about experience in their career. So there’s been some a lot of good come from this. And so I’m so happy again. Yes, I could provide for my family now. And my attorney always told me, Tom, you’re gonna have to start your own company. So I looked at doing Amazon FBA before people were looking at that, like years and years ago, and I got tied up with my Alibaba supplier, hijacking my listing. And so I just sort of threw that away. And then the FBI called and said, Why don’t you try speaking? And I actually asked him, am I allowed to get paid to speak? They said, Yeah, you’re not you’re not glorifying it. It’s a training situation. It’s a learning thing for people in the industry. And so I started asking him to get paid early 2017, and then just ask for referrals. And so it spread all over the world. And the three years before COVID, obviously, it wasn’t great to be a speaker during during the last two years, but I pivoted to selling courses, and so about sharing my story and how that could impact accountants or attorneys or other professionals in their career, doing a revenue share with associations where these individuals have to have a certain amount of ethics credits. And so that was my COVID pivot. And now this year, everything’s back strongly speaking is back, the courses are doing well. And so that’s kind of my journey to where I am today, never had planned to talk about it. I always thought people that talked about their crimes, were early only and I really weren’t taking responsibility. So I think it’s very important as we did to talk about why it happened when I was thinking, accept responsibility. And also, you know, have the opportunity to talk about and provide some takeaways and some, some opportunity for people to put themselves in my shoes at that time. So yeah, it’s to me as I listened to you, it’s like talking about, yeah, this is a story. And now here’s what’s important. How does it relate to you? Yeah, right. Yeah. That’s right. I mean, we can all anybody that’s old enough to have had that experience in their career where you’re at that line, you can go this way or this way. And then you know, you often ethics training today has a problem. And it’s often philosophy based, so it’s often these de ontology or utilitarianism. I mean, Penn still teaches this way. Like, it’s all Greek philosophy based on like, you have to bring psych Psych. 101. And then let’s have a case study on everybody does it. Let’s have a case study. I’m not hurting anybody. If I buy a small amount of stock, like that’s something that like stays with people. When I speak, ethics professors, they’re like, to anything you learned in ethics day with you. I mean, here’s my story. Obviously, I do didn’t do that well in ethics, but also It’s not the ontology or utilitarianism of virtue ethics, it’s these psychological traps everybody does it, I’m not hurting anybody. Yeah, these are immaterial trades. Like, that’s what we should be teaching students. So people can get very compartmental, about ethics. Like, you can be completely ethical at home, and with your relationships, your friends and stuff, and at work. You know, you could be 90% And you fart mentalize, that you go up for some of the reasons you said, so, I’m so glad that you and your wife stayed together during this during this because because as you said, you know, the vast majority, that doesn’t happen. And it’s important, huge, like, huge. So now you’ve got a book that you’re working on, and you’re looking to become an entrepreneur on top of your speaking business. What’s when When do you feel like you’re going to be back to where you believed you belonged? before this all happened? Yeah, that’s a great, that’s a great question. You know, I’m not used to say, you know, through my, through my future away, sort of, you know, through my past away, sort of the situations where you throw your past away Wharton School, great hedge fund, never be able to use it again, and you throw away my future, I thought I’d be this hedge fund manager and making millions and millions of dollars, but I just turned 45, and I’m so happy, where I am now is having a business, I think making a difference in giving a memorable keynote presentation for companies for universities having the opportunity to do this. So I think I’m probably happier than I would be if I was making millions and millions of dollars, because I don’t think that lifestyle many of my friends who do make that kind of money don’t really know their children. They’re they’ve actually on their second wives. And so you know, that’s other than, you know, not having on that month, like, where I am now is, I’m very happy with where I’m very content where I am, I’m not worried about the things I was worried about my 20s These guys are doing it now I’m part of that group, like I’m so well more aware, well aware of those biases that I had early in my career, like, I was so concerned about the other guys that were breaking the rules and getting ahead, I was so insecure. And I should have just been focused on myself improving as an investor improving in my line of work, self improvement, and not worried about other what other people are doing because I was drowning in insecurity. And so I think we all as we get later in life, can give ourselves in our 20s a lot of advice now whether in our 20s, we would accept that advice. You know, who knows, but I think, especially going through this experience, I look back, if I had been looking 10 to 15 years, where do I want to be and work backwards, I think that’s important for young people, too, don’t get so caught in the short term situation where you’re not looking at in the years ahead. And people that are older, like the senior people and industries, if your subordinate is doing something, you have to ask about their short term success, you can’t not ask the questions, you have to ask questions that you may not know one of the answers to. And I think that applies to any industry where my boss didn’t ask me the questions. Maybe he would have caught me early. Or maybe I think he knew what I was doing and didn’t want to know the answers. And so I get that’s not a good position to be in. So yeah. Or maybe he liked the answer. As long as it was. He could somehow put a wall up between he and you or his thought about it. And yeah, yeah, exactly. I think that’s what he was thinking. Like, don’t tell me about your success. But but by keeping up by the way, yeah, yeah. Well, Tom, this has been a great conversation, thank you so much for being on the show and sharing your story and sharing your aspirations as well. I love the work that you’re doing and the embracing of what’s, you know, this part of you and, and you’ve basically flipped it on its head. So it’s no longer tip or X, you know, insider trading is tip or X, you know, how can I help you become a better person while I become a better person as well, at least that’s how I kind of see it. Ya know, as the attorney 45, it feels like a big moment where maybe I’m halfway there, you know, and so it’s sort of do I want to be remembered for these four trades in my 20s. I do want to be remembered for the second career, the industry has been so kind to give me and all these companies that hired me been kind of given this opportunity. So I’m very grateful every day when I wake up now, and just as you said, 17 years married now and two wonderful daughters. And so yeah, it’s things are very good. But But thanks for having me on today. Yeah. You didn’t say anything about the book. Sorry. What’s what’s happening with your book? Oh, yeah. So I’m still going through ghost writers now on Upwork. So talking to talking to scribe, also. So I know you’ve mentioned that before you published my book through strap as well. Yeah. So right now I’m at the Medeco stage on Upwork. Just interviewing people and trying to find the right voice. I don’t think I’m going to be sitting down and closing the door for a while and writing it because the speaking is really picked up for me which I’m so happy it has this year. So but I don’t have a date on that. But I’m working on. I’m working on sort of quasi more of also lessons learned from all these speaking engagements the last few years because there’s so many things I have learned talking to companies who have had problems or and how those can happen and how we can stop that from happening before. So I’m looking at whether I want this to be a memoir plus lessons learned. So it’s kind of an evolving process. But hopefully soon we’ll have it all kind of rounded up. Well, your friend Craig is an excellent writer. I mean, I read his book. I thought it was wonderful. So wonderful book. Yeah. Well, good luck. And again, thank you so much for being on the show, Tom. Thank you, Mike. Thanks for having me on. It’s great. This is the intro for the Tom Hardin, episode three to one. On today’s podcast, I’m talking to Tom harden. And if that names not familiar to you, you may recognize his codename that the FBI gave him which is tipper X. Back in the mid 2000s, Tom was involved in one of the biggest insider trading scandals, I guess, or prosecutions ever. And he got caught up in that he ended up being an FBI informant wearing a wire and being involved in 80 or so. Convictions due to his work. So we talked about that, how it happened, why it happened, and what he’s done with that and with his life, ever since particularly working with as a speaker and as a mentor to young students, college students and coming out of wanting to go into the world of business and understanding the ethical challenges that they might face. It’s great conversation. I think you’re gonna love it. Enjoy

Mike Malatesta

Mike Malatesta

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