Insider Trading Allegations Continue To Rise In '08

Insider Trading Allegations Continue To Rise In '08 - 1/21/2009 , Class Action News, Class Action, Securities News, shareholder class action, claim, litigation, securities action, common stock'>

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Insider Trading Allegations Continue To Rise In '08
Christie Smythe

Securities Law 360. January 21, 2009
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EXCERPT: An oversight body for the New York Stock Exchange referred a record number of suspected insider trading violation cases to the U.S. Securities and Exchange Commission in 2008. The number of those cases involving probable hedge funds, however, fell last year after steadily rising since 2002. NYSE Regulation Inc., a nonprofit organization that oversees the exchange, reported a total of 146 suspected insider trading cases to the SEC last year, compared with 141 in 2007 and 111 in 2006, according to the group. Of those cases referred last year, 79, or 54 percent, involved probable hedge funds, which are largely unregulated private investment funds. In 2007, 101 of the potential insider trading cases referred by NYSE Regulation, or 72 percent, likely involved hedge funds, according to the organization. The percentage was even higher in 2006, when 88 of the referred cases, or 79 percent, involved likely hedge funds, according to NYSE Regulation. In 2002, 20 of 100 potential insider trading cases referred to the SEC involved likely hedge funds, NYSE Regulation reported. Insider trading generally refers to buying or selling a security using nonpublic information, and in breach of a fiduciary duty, according to the SEC. Violations can include the use of nonpublic information by corporate insiders to trade in their own accounts or to tip off outsiders who might financially benefit from the information, the agency said. The SEC reported a bump in insider trading enforcement actions last year, bringing a total 61 civil and administrative cases against suspected insider trading regulation violators, compared with 47 such cases in 2007 and 46 such cases in 2006, according to agency reports. Last year, insider trading cases constituted a total of 9 percent of the agency’s enforcement actions, compared with 7 percent in 2007 and 8 percent in 2006, the SEC reported.

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