More Down Inside Trading

Way down inside- sang Led Zeppelin.  Was it about the corruption of insider trading that is rampant on Wall St.  This is from the NY Times. The Securities and Exchange Commission is investigating whether trades in health care stocks by the hedge fund SAC Capital Advisors as recently as last year were made using inside information, a person briefed on the matter said on Wednesday.  Note:  this is on top of investigations on Goldman Sachs and fraud around the mortgage backed securities.


The investigation comes as SAC, one of the most prominent hedge funds in the world with $12 billion in assets under management, has become something of a focal point for authorities. Two former SAC portfolio managers have pleaded guilty to criminal charges of using inside information to trade technology stocks.
Separately, the S.E.C. is looking into whether the hedge fund used inside information about the 2007 takeover of MedImmune, a biotechnology company, the person said. The Wall Street Journal earlier reported about the inquiry into MedImmune.

Neither SAC nor its billionaire founder, Steven A. Cohen, has been accused of wrongdoing by the S.E.C. or by any other authority. A spokesman for SAC declined to comment on Thursday.  The inquiries into the SAC trades are part of an accelerating effort by the S.E.C. and the United States attorney’s office in Manhattan to crack down on insider trading, with a particular focus on hedge funds. The criminal investigations by federal prosecutors have resulted in charges against 49 people, 39 of whom have pleaded guilty.

Two people who have pleaded guilty were the former SAC employees Noah Freeman and Donald Longueuil. Mr. Freeman is expected to testify Thursday at the trial of Winifred Jiau, a consultant for an expert network firm who is charged with leaking inside information. SAC has said that it is “outraged” by the conduct of the two former employees.  The cases against Mr. Freeman and Mr. Longueuil are part of the government’s examination of expert network firms, which developed over the last decade alongside the proliferation of hedge funds. The government has filed criminal charges against 13 people connected to the firms, eight of whom have pleaded guilty.

Note:  In my view, the whole system is guilty.  Time to get the Glass-Steagall and stop the government insurance of this investment corruption.  Free our commercial banking and checking accounts from the investment banks, just like FDR did in 1933.