U.S. Preparing Sweeping Insider-Trading Charges: Report

NEW YORK: U.S. officials are preparing insider trading charges against a host of financial players, including investment bankers and hedge fund managers, The Wall Street Journal said, citing people familiar with the matter.

The charges could surpass any previous investigations on Wall Street, and examine whether certain players garnered tens of millions of dollars in illegal profits, the newspaper said in its Saturday edition.

The investigations could expose "a culture of pervasive insider trading in U.S. financial markets", especially in ways private information is transmitted to traders through connected insiders, the newspaper said, citing federal authorities.

Wall Street has been abuzz for weeks about federal authorities filing another big insider trading case that might compare to last year's Galleon case.

Two lawyers speaking to Reuters, who declined to be identified because they represent potential clients, said agents from the FBI had approached hedge fund traders over the past two weeks and a number of traders had contacted lawyers.

While the scope of the investigation is unclear it is said to focus on the use of so-called expert network firms, businesses that command big fees from hedge funds to match them up with experts in particular industries. There has been concern for years that some experts may be passing on confidential information about public companies to traders.

A year ago, shortly after the Galleon case broke, the Philadelphia office of the U.S. Securities and Exchange Commission sent out two dozen subpoenas to hedge funds and other traders, seeking information about their trading in a number of health-care related buyouts. The SEC's Philadelphia office is ground central for the agency's new task force that is cracking down on insider trading.

The Wall Street Journal report of the investigation nearing an end comes a few weeks after federal authorities charged a French doctor with passing on confidential information to a portfolio manager at FrontPoint Partners health care hedge fund.

FrontPoint has not been charged.

Authorities are also investigating Merck & Co's takeover of Schering-Plough and AstraZeneca's takeover of Medlmmune, according to The Wall Street Journal.

(Reporting by Ernest Scheyder and Matthew Goldstein; Editing by Nick Macfie)

Copyright 2010 Thomson Reuters. Click for Restrictions.

©

Comments

[AdamK4rationalthought]

10:54 AM on 11/23/2010

So many defeatists on this thread...if everyone thought that the real culprits would never see justice then the authorities will be more likely to bend to their will.

[bola47]

09:23 AM on 11/22/2010

blah, blah, blah. some janitor at goldman sachs will go away for 10 years while the real crooks ratchet up their rape of america.

[HmblDog]

08:49 AM on 11/22/2010

if the only ones charged are the industry experts (taking the payoff) and not the traders (making the payoff) then the probably will expand not go away.

[cgin]

03:37 AM on 11/22/2010

All of these legal wrangling and the lexicon that is being used to describe it, says a lot about a society. A society whose value system, with which it makes moral judgments, encourages- by acquiescing to euphemisms- the reckless and malicious behaviors that nearly caused the collapse of the world’s leading economies. These imaginative, “white collar crime”, euphemisms intentionally distort the true gravity and magnitude of the actual crime itself. They are incapable of eliciting the public’s indignation warranted by such crimes. We’ve come to accept “white collar crime” legal euphemisms as being benign and non threatening in nature; Although it’s conspicuously clear that white collar crimes can indeed cripple a country. While the true extent and cost of white-collar crime are unknown, it is estimated to cost the United States somewhere between $300-$660 billion annually, according to the FBI. Yet, less than 2% of the persons committed to prisons in a year belong to the upper class. As we continue to foolishly acquiesce, the rich continues to steal our country blind- a trillion at a time. Our moral compass has been hijacked and corrupted by the upper class, and is costing us our country. Still we’re surprised when Financial Crisis Inquiry Commission Chairman Phil Angelides said in an interview that "there are very powerful financial forces" seeking to undermine the panel's legal investigation.

[WorkhelpWorkhelp]

02:31 AM on 11/22/2010

Roll some heads !
Should have done it before the election. Dangit.

[GreenEyedGuru]

02:28 AM on 11/22/2010

I have a friend who used to work at goldman as an analyst, she told me that hedge fund managers would routinely call in after a trade went bad and move the trade to a different account (fund) to protect their 'top' funds from taking the loss.

[oilfield]

11:20 PM on 11/21/2010

are they going to start with congress and their aids?

[mrcontinental]

12:53 AM on 11/22/2010

That's lobbying aka "legalized bribery" which is encouraged and totally legal.

[Bruce vain]

06:46 PM on 11/21/2010

Wow..I hope it's all true and when the President and the Justice department slams these dudes..the rethugs will of course choose the wrong side again

[Grannyover70]

06:41 PM on 11/21/2010

Everything gets leaked; there are Republican moles everywhere.

[aghastinny]

03:16 PM on 11/21/2010

This was NOT leaked to the media by accident. Im sure all the traders are now moving thier assets to safety zones prior to indictment so that the big show trials wont actually cost them anything (but will cost the taxpayers millions). Once again, the only people who will gain from this are lawyers and corrupt grandstanding politicians.

[whatsyrdamage]

12:41 PM on 11/21/2010

I can see it now...numerous hedge-fund traders with one answer to all questions, "I invoke my fifth amendment right against self-incrimination."

[Klarsonent]

12:53 PM on 11/21/2010

You've got it. And then they'll "walk" with a slap on the wrist of a fine.

[wdw505]

02:19 PM on 11/21/2010

agreed........i'm sure they will

[wtf-please]

12:28 PM on 11/21/2010

Hope this takes everybodys view off the Subprime Fraud Ponzi Scheme Crimes that buried the global economy..

Banks can quietly buy back fraudulent loans made at origination a few years back.. whew!

[wtf-please]

12:26 PM on 11/21/2010

I hope they fine them a million dollars.. that'll teach 'em.. opps just read the Charlie Rangel punishment... they'll walk.. disregard post

[Eris23Skidoo]

04:23 AM on 11/30/2010

No correlation there. Rangel is a member of congress, therefore he is not above the law. But these banksters are totally above the law.

[judow]

10:49 AM on 11/21/2010

i doubt any of them will ever see a day in jail, i hope if nothing else they lose their license and are fined the amount they swindled

[philprism]

04:04 PM on 11/21/2010

No chance, its a sham and everyone knows it.

[FOXYROSE]

09:19 AM on 11/21/2010

Goldman is always in the middle of things - that is where the corruption starts.