Inside Trading Becomes ‘Systemic’ at Hedge Funds

Inside Trading Becomes ‘Systemic’ at Hedge Funds - 11/13/2009

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:

Inside Trading Becomes ‘Systemic’ at Hedge Funds
Joshua Gallu

Bloomberg. November 13, 2009
_________________________________________________________________________

EXCERPT: Insider-trading cases among hedge funds including Galleon Group LLC may reflect a “systemic” behavior that has spread within the industry, Securities and Exchange Commission Enforcement Director Robert Khuzami said. “You have funds whose business model consisted of vigorous attempts to collect information from corporate insiders and to utilize that information to trade,” Khuzami said yesterday at the Bloomberg Washington Summit. Such an approach is “potentially more dangerous” than previous insider-trading cases that reflected “opportunistic” behavior, he said. […] “I’m sure that the vast majority of hedge funds and others operate in a lawful manner,” Khuzami said. “However there are some aspects to hedge-fund operations that do give enforcement types like myself concern,” he said, citing algorithmic trading, dark pools and the lack of a corporate culture of compliance among the issues. In a dark pool, trades are matched without posting quotes on public exchanges. Laws forcing hedge funds to register with the SEC will increase transparency and improve compliance, he said. […] Since the arrests were announced, the SEC has seen an “uptick” in individuals coming forward with information on misconduct, Khuzami said, adding that people trading on confidential information “should be worried.” Khuzami, 53, said prosecutors will continue using undercover techniques including informants and front businesses to attract wrongdoing and wiretaps to “ferret out” misconduct. The SEC has endorsed legislation that would let the agency pay whistleblowers for information leading to a case.

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

�