Now that Raj Rajaratnam has been convicted in a landmark win for the government, it seems that some other politicians are trying to make a name for themselves using hedge fund investigations.
Iowa Senator Chuck Grassley is now conducting a unique investigation into suspicious trading activity at SAC Capital and its two periphery hedge funds, CR Intrinsic and Sigma Capital, according to the Wall Street Journal.
The investigation began when Grassley asked to review 20 trades that SAC Capital had already been investigated for. According to the Financial Times, he first asked Richard Ketchum, FINRA Chairman, for “for details of all referrals related to SAC Capital sent to the brokerage regulator since January 2000.”
He received details about 20 trades which the Wall Street Journal says FINRA “suspected SAC could have bought and sold stocks based on inside information.”
And now, the probe has since evolved into an investigation into SAC’s options trading.
(Options, interestingly, were the one type of purchase that Raj Rajaratnam advised his insider trading ring to not make in order to avoid getting caught. Prosecutors at the Raj trial called options, “stocks on steriods” and wiretaps of Raj’s conversations showed him saying, “don’t use options” to co-conspirators.)
It’s a surprise that a politician is leading this investigation, but SAC welcomes it –
“We welcomed the opportunity to meet with the staff to educate them about the firm and our compliance efforts, and had an entirely appropriate, professional and cordial meeting. We will continue to co-operate in any way we can,” said a spokesman.
This seems almost entirely like a political move and thus, not that serious.