Two SEC Lawyers Investigated by FBI on Insider-Trading Concerns

Two SEC Lawyers Investigated by FBI on Insider-Trading Concerns - 5/15/2009

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2009 News and Press Releases

SEARCH

News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Two SEC Lawyers Investigated by FBI on Insider-Trading Concerns
David Scheer and Jesse Westbrook

Bloomberg. May 15, 2009
_________________________________________________________________________

EXCERPT: U.S. prosecutors and the FBI are investigating whether two Securities and Exchange Commission lawyers illegally used nonpublic information from the agency to bet on stocks, SEC Inspector General David Kotz said in a report. Kotz, who told Congress last year he was examining whether frequent trades by the pair broke agency rules, referred the case to the U.S. Attorney’s Office in Washington after finding evidence the bets might amount to insider trading, he wrote in the March 3 report released by Senator Charles Grassley. Both lawyers still work for the agency and denied improper conduct. The report faults the agency for inadequately monitoring trades by employees and relying on an “honor system.” The lawyers frequently discussed stocks at work, traded in at least one company under investigation and didn’t properly disclose some transactions, it says. One lawyer made 247 trades in the two years ending January 2008, and the other made 14. The agency “has essentially no compliance system in place” to ensure employees don’t abuse the “tremendous amount of nonpublic information they have at their disposal,” Kotz wrote. The SEC is already working on steps to guard against potential misconduct, and the report doesn’t conclude that insider trading occurred, agency spokesman John Nester said. The SEC’s new chairman, Mary Schapiro, has “made it a priority to significantly improve the agency’s ethics and compliance programs around employee stock ownership,” he said. […] The 51-page report, redacted to remove names of employees and the stocks in which they traded, details stock bets. One of the SEC employees sold all her shares in a “large health-care company” two months before the agency began investigating the company, the report says. She also sold stock in a “global” oil company two days before the SEC opened an inquiry.

Back to News page | Back to Archived News 2009 page | Back to Top

�