Another insider-trading case hits financial world
On the Money From the December 3, 2011 print edition The FBI raided three large hedge funds in New York, Connecticut and Massachusetts on Nov. 22 as part of a three-year insider-trading investigation. Already, 14 defendants have pleaded guilty. “There’s a lot more patterns and serial insider trading than we previously thought had occurred,” said Scott Friestad, associate director in the Securities and Exchange Commission’s division of enforcement. Authorities say the criminal and civil investigations could surpass the impact on the financial industry of any previous such probes. There may be more arrests, as investigators examine the role of consultants and analysts who provide hedge funds and mutual funds with detailed information about the businesses and industries in which they specialize. To better understand what all this is about, let’s examine what federal law has to say about insider trading. Financial gain often is dependent upon the ability to predict the future. (The back-dating options scandal showed that in the absence of predicting the future, some people will re-invent the...
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