SEC Official: Common Wall St. Conversations Carry 'Troubling' Potential For Abuse

The Securities and Exchange Commission might be taking a closer look at common Wall Street practices that occupy an ethical gray area.

Certain routine conversations in the business world carry the potential for abuse, and can often be "troubling," David Rosenfeld, co-head of enforcement at the SEC's New York office, told a group of legal and financial practitioners earlier this month, according to Fox Business News. Some see the comments as a hint that the SEC may consider "expanding the definition of insider trading," according to the report

The SEC has been taking an aggressive stance against insider trading in recent months, with Chairman Mary Schapiro calling it a "problem of tremendous magnitude," and the agency filing more than 100 cases related to insider trading between 2010 and 2011.

Among the SEC's highest-profile cases ever was the successful prosecution of Raj Rajaratnam, a hedge fund billionaire who thanks to inside information made lucrative trades of Goldman Sachs and Google stock, among others.

At the same time, critics of the SEC say the agency's focus is misplaced, and that it has done little to punish the people and institutions that helped bring about the financial crisis of 2008 -- a near-meltdown of the national banking system in which insider trading played a relatively minor role.

For its part, the SEC says it has shifted its approach to financial-crisis prosecution cases in order to generate more charges that might stick. Meanwhile, the agency has pointed to its own record on insider-trading cases as proof that it is serious about stamping out financial misconduct.

SEC representatives have also complained that the agency simply doesn't get enough federal funding to be as effective as it could be. In 2011, the budget for the SEC was $1.185 billion.

A spokesman for the SEC has indicated that Rosenfeld's remarks this month don't necessarily point toward an expansion of the agency's definition of insider trading.

Comments

[dbrett480]

04:18 PM on 02/25/2012

The Wall Street execs know exactly what is legal and illegal and focus their business activities on the gray areas.

[Una Bubba]

03:32 AM on 02/17/2012

The SEC needs to be abolished altogether. Citizens United has declared that these corporations are citizens, therefore, these cases belong in the criminal courts. If corporations really are citizens, it is wholly inappropriate and unacceptable to have two different systems of justice.

[Janzee12000]

09:34 PM on 02/16/2012

Common Wall Street conversation:" Yo! Yous got dat thing from Vinny? Ya! Dat's wat I'm talkin' abt! I need yu ta make shur dat it happens on time or he'll need to make do sum dance time. Yu know wat I mean?! Tanx!

[Dosadi]

08:41 PM on 02/16/2012

There is not a hedge fund in existence that could survive without insider trader information. That is how they feel confident in shorting entire countries.

[hobo62]

07:16 PM on 02/16/2012

Wall Street misconduct never seem to bother the SEC before.

[cats530]

05:53 PM on 02/16/2012

Is Mary Shapiro still running the evidence shredders 24/7?

[cats530]

05:49 PM on 02/16/2012

Oh please. The SEC isn't worried about anything these con men do - the banksters pay them off and they look the other way.

[MOCMOC]

04:08 PM on 02/16/2012

Boehner has made more money from insider trading than all the congressme­n put together, and Cantor created a loophole to the STOCK ACT - "The Cantor Loophole". Eric Cantor himself has a history of insider trading and a vested interest in seeing that this corruption doesn't go away. The only way it will be stopped is if people make noise about it. Contact your representatives.

[BG2323]

02:42 PM on 02/16/2012

SEC Official: Common Wall St. Conversations Carry 'Troubling' Potential For Abuse...

In other news: "SEC Official Moonlights as Captain Obvious in Attempt to Spur Apathetic Masses"

[StopMakingSense2]

02:05 PM on 02/16/2012

Gray area, black area, whatever! What are ethics again? I'm an investment banker I don't know about these things! I keep trying to learn about them but my subconscious keeps blocking them out! If I contribute enough to conservative causes there is a good chance I won't have to bother since they like to make the unethical legal!

[gx5000]

01:09 PM on 02/16/2012

I'm sorry, the whole stocks and bond thing, a legit ponzi scheme, sigh.....

[afairview]

01:02 PM on 02/16/2012

I don't think insider trading will be 100% eliminated, everybody wants and edge in stock trading. The problem is when you mix regular banking with stock trading. You are mixing money that is not there for that purpose and when the whole thing goes down it can affect people that didn't know that banks were gambling with their money. That's why the Glass Steagall act was so important. It should be restored.

[MOCMOC]

04:13 PM on 02/16/2012

I don't know what the Glass Steagall act is. I'll look it up.
Eric Cantor has created a loophole to the STOCK ACT - "The Cantor Loophole" which has weakened the whole thing. He has a long history of insider trading. Not a lot is being said about it and the media isn't focusing on him in particular. They should be.

[KRY]

11:52 AM on 02/16/2012

It passed after Eric Cantor get my way tweeked it .
Joke stock act bill.

[Rick Eriksen]

11:49 AM on 02/16/2012

The way I hear it there are now so many people doing insider trading that they are going to have to come up with a new term for insider insider trading so you can tell the difference between who is an insider and who is just using sources that are not published information…

[Epimenides]

11:41 AM on 02/16/2012

Until there is clear evidence to the contrary, prudent people should assume:

> That large trading corporations routinely manipulate markets and individual stock prices.
> Executives and brokers regularly trade on inside information unavailable the public.
> Most brokers will defraud most clients who are not rich.
> Ordinary investors will be the last make profits and the first to suffer losses.

When, as now, the Federal Reserve and the Treasury are freely providing money to banks below the rate of inflation, ordinary working people must either watch inflation erode savings earning almost no interest, or take risks in the dishonest stock and markets. Either way, the average person will lose and the plutocrats will profit from those losses.

[PharmaCan]

11:55 AM on 02/16/2012

How very astute of you. Well said!

Fanned & faved!

[Dennis]

12:10 PM on 02/16/2012

F&F! The law and enforcement mechanisms are so far behind the large brokerage houses that it's pathetic.

[LHoney]

01:01 PM on 02/16/2012

Faved! LOVE your bio!