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The Rich Roll Podcast

The Plight of “Tipper X”: How Tom Hardin Became The Most Notorious FBI Informant in the Biggest Insider Trading Case in Decades — And The Long Run To Redemption

The Rich Roll Podcast

Rich Roll

Society & Culture, Health & Fitness, Education, Self-improvement

4.713.3K Ratings

🗓️ 11 May 2015

⏱️ 124 minutes

🧾️ Download transcript

Summary

This week we explore some very new terrain. Let's kick it off with the Greek myth of Icarus. As the story goes, Daedalus — a master craftsman best known for building King Minos' labyrinth to trap the Minotaur — plied his talent to construct a pair of wax and feather wings to help him and his son Icarus escape from Minos' vendetta (it's a long story) and Crete altogether. Being the good father he was, Daedalus pled with his son not to fly too close to the sun for fear that the heat would melt the wings. But as sons are wont to do, Icarus ignored his father’s advice. The rest is history. The heat indeed melted Icarus' wings, sending him into a deathly free fall collision with the sea which today bears his name, the Ikarian Sea near Ikaria — ironically one of the Blue Zones as described in my recent podcast conversation with Dan Buettner. As most know, this is an age-old remonstration about ambition. A tragic allegory about the perils of hubris, particularly when fueled by a sense of entitlement, and perhaps sprinkled with a light dusting of denial. These are all very human traits of course. And if today's guest is anything, he is quite human indeed. Tom Hardin was a highly motivated young guy with a big bright future and Wall Street aspirations. After graduating from the prestigious Wharton School of Business, he was on track to achieve his dream when he landed in the fast paced hedge fund world and quickly rose through the ranks. But it wasn’t long before Tom felt he was falling behind – lacking that mysterious competitive ‘edge’ so many others seemed to freely enjoy (without repercussion) to their reward in untold millions. What was that edge? If you ask Tom, he will tell you the not so secret to success within the insular hedge fund world meant having a network of inside sources willing to share reliable confidential information about companies they worked for or with. Everybody's doing it. Nobody's getting caught. I'm falling behind. Then one day Tom got a call from an investor colleague named Roomy Khan – a woman with some pretty juicy insider tips. The timing was right. Tom was primed. And that fateful moment arose. That moment when you make a decision to take a very small step over a very important line. A decision you simply cannot undo. Not now, not ever. For Tom, it started with taking a few small crumbs off the table. An imperceptible insider trade here, another one there. Until one day, the previously unthinkable became easy. Almost too easy. Capitalizing on a handful of secrets fed by Khan and others about companies like Google, 3Com and Hilton Hotels, Tom's flight towards the sun escalated to the tune of $1.7 million in gains for his fund and $46K in personal profits. Then in July 2008, while dropping of his dry cleaning one morning, Tom felt a tap on the shoulder. A tap that would alter the trajectory of his life forever. Like a scene out of a movie, Tom turned to face two FBI agents boxing him in with with a Hobson's choice – either get in the back of the black sedan for a trip downtown, or start providing actionable information on those higher up the food chain. Panicked and heart pounding, he immediately opted for the latter. Ultimately, Tom became one of the most prolific informants in securities fraud history. Soon infamous as the mysterious, unnamed Tipper X, Tom spent the next several years wiretapping and documenting the illegal misdeeds of friends and c...

Transcript

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0:00.0

The Rich Roll Podcast

0:10.0

The Rich Roll Podcast

0:12.0

My name is Rich Roll, I'm your host, welcome to my podcast.

0:16.0

We're going to do things a little bit differently this week.

0:18.0

I'm going to kick it off with a story.

0:20.0

It's a story from Greek mythology.

0:22.0

It's the story of Iqa'ris.

0:24.0

And for those that are not familiar with it, it goes like this.

0:27.0

There was a guy called Deadlyss, he was a master craftsman, and Deadlyss constructed a pair of wings made out of feathers and wax to help both him and his son Iqa'ris escape from creed.

0:38.0

Knowing his son while Deadlyss pled with Iqa'ris not to fly so close to the sun, for fear that the heat would melt the wings.

0:46.0

But of course Iqa'ris ignored his father's advice as sons are want to do, and no surprise the heat indeed did melt the wax.

0:54.0

Iqa'ris kept flapping, but soon realized that he had no feathers left and fell into the sea in the area which today bears his name, the Iqa'ris near Iqa'ria, which ironically, if you're a listener to the podcast, you might recall is one of the blue zones per my interview with Dan butiner.

1:12.0

In any event, it's an age old story, it's a story about ambition, it's a story about tragedy at the hands of hubris with a little sprinkling of entitlement and perhaps a light dusting of denial.

1:24.0

And these are very human traits.

1:27.0

And if today's guest is anything, he is very human.

1:31.0

Tom Hardin. So who is Tom Hardin?

1:34.0

Well, Tom Hardin was a highly motivated young guy who graduated from the prestigious Wharton School of Business with Wall Street aspirations and chasing his dream.

1:44.0

He landed in the hedge fund world and quickly began rising in the ranks.

1:48.0

But it wasn't long before Tom felt like he was falling behind that he was lacking that edge that so many others seemed to freely enjoy without any repercussion.

1:58.0

What does that mean? Well, it meant in his case, sources with secrets about companies.

2:03.0

They worked for or with. And then one day he got a call.

2:08.0

It was a call from somebody named Rumi Khan who was an investor friend of his who offered up some pretty juicy insider tips and that moment arose.

...

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