Insider Trading At The SEC

The SEC isn’t great at identifying most kinds of fraud, but they’ve always had a knack for identifying high-profile insider trading cases.

Maybe because they’re intimitely familiar with it?

Bloomberg: U.S. prosecutors and the FBI are investigating whether two Securities and Exchange Commission lawyers illegally used nonpublic information from the agency to bet on stocks, SEC Inspector General David Kotz said in a report.

Kotz, who told Congress last year he was examining whether frequent trades by the pair broke agency rules, referred the case to the U.S. Attorney’s Office in Washington after finding evidence the bets might amount to insider trading, he wrote in the March 3 report released by Senator Charles Grassley. Both lawyers still work for the agency and denied improper conduct.

The report faults the agency for inadequately monitoring trades by employees and relying on an “honour system.” The lawyers frequently discussed stocks at work, traded in at least one company under investigation and didn’t properly disclose some transactions, it says. One lawyer made 247 trades in the two years ending January 2008, and the other made 14. Read the whole thing >

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