SEC Working Group Targets Insider Trading

We have never found knock-knock jokes to be funny. And it is no joke if the SEC comes a-knocking at your door.

These are strange days on Wall Street. The indices might be near multi-year highs, but the fixed income markets are in a world of hurt, layoff notices are rolling through the Street and it seems nearly every brokerage CEO is on the ropes and fighting for their job.

And if that is not bad enough, the SEC is stepping up its enforcement activities:

Insider trading appeared to be “rampant” among Wall Street professionals, and the regulator has formed a working group to focus on it, said a senior official at the Securities and Exchange Commission.

"I believe we're going to see more insider trading cases," Linda Chatman Thomsen, the SEC's enforcement director, told reporters on the sidelines of a securities fraud conference, according to a Reuters report.

"I am disappointed in the number of cases we are seeing by people who make an abundant livelihood in the market that they are sort of abusing by insider trading," said Ms. Thomsen. Investment News

The Street has been on edge as the SEC continues to sniff around hedge fund trading related to the trading ring snared in March of 2007. Thirteen people were charged in that matter, as well as several hedge funds. Hedge funds will continue to be the focus of further probes, but regulators are not stopping there, targeting the municipal bond market and mopping up the options backdating scandals, which have involved over 180 companies probed thus far.

Corporate executives, most notably Angelo Mozilo of Countrywide Financial, have become fond of setting up 10b5-1 trading plans to provide for an orderly disposition of the holdings, but the SEC is looking to see if this just another way to avoid suspicious trading. The agency is taking no prisoners.

“There will be more to come,” Linda Thomsen told the securities law conference. But the investment community might continue on edge given the SEC’s interest in their domain:

Separately, Bresnan said the agency was seeing a trend in larger rings involving more people, international cases, as well as those involving securities professionals and hedge funds.

Somewhere somebody is sweating bullets.

SEC sees “rampant” insider trading on Wall Street
Reuters

Insider trading appears to be widespread
Financial News
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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