After three years of research the Securities and Exchange Commission took action in a huge insider trading case Mon. The Federal Bureau of Investigation raided the offices of 2 hedge funds in Greenwich, Connecticut, as part of a substantial insider trading probe. A few months ago the Securities and Exchange Commission sent subpoenas to more than 30 firms suspected of being involved in insider trading deals prior to the economic crisis in an investigation that might yield criminal charges in a matter of weeks.
Exactly what comes from the 3-year SEC probe
It’s considered insider trading when a person, before making a deal public, will purchase stock in a business or bet against it. When the value of those shares rises after the deal is announced, the inside traders sell them. Across the U.S., in theory, insider trading charges ought to be proved to have taken place against independent consultants, Wall Street banks, hedge funds and mutual funds by the Securities and Exchange Commission three-year investigation. According to the Wall Street Journal, insider trading rings are what civil and criminal probes are looking for. Millions in illegal profit was made by these trading rings.
Goldman Sachs one of several focuses on
In one of several aspects of the Securities and Exchange Commission insider trading probe, prosecutors suspect that Goldman Sachs bankers leaked information about health care takeover deals to certain investors in a flurry of acquisitions leading up to the financial crisis. "Expert network" firms hiring employees of companies that used to work there in order to give hedge fund investors some advice which is another thing being looked into. Integrity Research Associates accounts that a ton of hedge funds use expert networks. In fact, over a 3rd does this. There has also been a lot coming down on independent analysts and research boutiques.
FBI will probably assign some jail time
Federal prosecutors are anticipated to start filing criminal and civil insider trading charges before the end of the year. The Securities and Exchange Commission has had the FBI and U.S. prosecutors involved with the whole thing. Hard jail time will likely be the result because of this. This would be different than the civil suit brought by the Securities and Exchange Commission against Goldman Sachs for mortgage fraud last summer. The only reason Goldman Sachs got out of that situation was by paying a huge penalty fee. The Wall Street firm had never seen a payoff that large before. About two weeks of Goldman Sachs profits were used to pay for the $550 million fee.
Articles cited
Wall Street Journal
online.wsj.com/article/SB10001424052748704170404575624831742191288.html
MSNBC
msnbc.msn.com/id/40317931/ns/business-us_business/
Politics Daily
politicsdaily.com/2010/07/16/goldman-sachs-fine-in-fraud-case-wall-street-firm-can-afford-it/