In the spirit of Den of Thieves, James B. Stewart’s classic book about the insider trading scandal of the 1980s, Sheelah Kolhatkar has written a very readable account of the Justice Department, SEC, and FBI’s legal pursuit of SAC Capital and its leader, Steven Cohen, one of the hedge fund industry’s most renowned and successful investors.

The story describes the wide-ranging, multi-year investigation of insider trading in the hedge fund industry that ensnared dozens of portfolio managers, traders, and analysts. This book is as entertaining as a page-turning crime thriller and intensively researched, based on hundreds of interviews, court papers, FBI reports, and other documents. It sounds fictional to read about a hedge fund portfolio manager disassembling hard drives where he kept potentially incriminating trading information and then walking around Manhattan in the middle of the night dumping the pieces in garbage trucks, but this actually happened.

A riveting read, the book also reveals some larger lessons for institutional investors. The first is that an investment firm’s culture is an intangible and sometimes fragile quality that organically evolves over years. A firm’s stated vision, espoused values, day-to-day practices, recruitment policies, departures, and compensation structure all influence culture. A rule-based compliance manual, no matter how long or detailed, will not alone shape a firm’s working environment. Callan’s white paper, “Ethics 101 for Investment Professionals,” by our CEO and Chairman, Ron Peyton, can help readers understand the importance of maintaining and continually reinforcing principles-based ethical guidelines that focus on best client outcomes.

The second lesson is that legally obtaining an information “edge” to drive short-term trading strategies became increasingly difficult for long/short equity managers over the past decade, in the era of RegulationFD, universal public information access, and increased investor competition. Callan’s own head of hedge fund research, Jim McKee, wrote about this evolution in the quarterly Hedge Fund Monitor, “Alternative Facts and the Evolving Role of Hedge Funds.”

The third lesson is that laws and regulations for the financial industry that protect the fiduciary interests of individuals and institutions must be enforced. Laws on the books are just that. Enforcement of the law is essential to maintaining faith and trust in our financial system. Any effort to deregulate the financial industry or reduce the funding of government agencies that investigate and prosecute wrongdoing should be greeted with a healthy skepticism.

Postscript: According to Bloomberg, Cohen wasn’t charged with insider trading. But SAC Capital pleaded guilty and agreed to pay a record $1.8 billion in civil and criminal penalties. The firm changed its name to Point72 Asset Management LP in 2014.