Letter of Credit Forum

After three years of investigations the Securities and Exchange Commission took action in a large insider trading situation Monday. Federal Bureau of Investigation agents involved in the insider trading case raided two hedge funds in Greenwich, Conn. Last fall the SEC supplied subpoenas to more than thirty hedge funds and other investment firms in an investigation of deals that led up to the economic crisis, and charges could possibly be filed by the end of the year. Article source: Insider trading probe affects cross section of financial industry by Personal Money Store.

SEC probe that takes 3 years to get outcomes

It is considered insider trading when an individual, 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. The 3 year investigation for the Securities and Exchange Commission ought to prove that insider trading taken place. Across the United States of America it occurred against Wall Street banks, independent consultants, mutual funds and hedge funds. 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.

Targeted is Goldman Sachs

Part of the Securities and Exchange Commission insider trading investigation involves investigating Goldman Sachs bankers. Supposedly these bankers leaked data leading up the economic crisis about the health care takeover deals. Another focus of the investigation is on "expert network" firms hiring previous employees of corporations targeted for acquisition that pass along advice to hedge fund investors. Expert networks are used for over a third of hedge funds, accounts Integrity Research Associates. There has also been a lot coming down on independent analysts and research boutiques.

Jail time with Federal Bureau of Investigation included

Federal prosecutors are expected 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 United States prosecutors included with the whole thing. Hard incarceration will likely be the result due to this. This would be different than the civil suit brought by the SEC against Goldman Sachs for mortgage fraud last summer. Goldman Sachs wriggled off the hook on that situation by paying the largest penalty ever by a Wall Street firm. The fee was $550 million. That’s about how much Goldman Sachs makes in profit in just two weeks.

Data from

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/