20 November 2010

U.S. Pursues Sweeping Insider-Trading Probe

Power Broker
U.S. Pursues Sweeping Insider-Trading Probe - WSJ.com:
"Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter.

The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.

The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.

Since banking is involved, the sexy banker in Boston story must be related somehow.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide 'expert network' services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge."
You would think that after all that has happened recently, these guys would figure out how to behave.  At least they could learn how to behave in the highly regulated environment where they choose to work.  Without looking at the additional information I can guess that many of the acts that resulted in charges were things no reasonable person would consider "insider trading."  I can also guess that enough of it was true, illegal insider trading.

In general, I still view the US government's enactment and enforcement of 'insider trading' as a sham.  Doing thorough research should not be punished.  Neither should cutting beneficial deals with your fellow business people.

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