Posts Tagged ‘SEC’

Linda Chatman Thomsen, the SEC’s director of enforcement warned that insider trading on Wall Street is starting to look as troubling as it was in the days of Ivan Boesky in the 1980s. Boesky was a Wall Street arbitrageur who was convicted of insider trading in 1987, spent two years in prison, and paid $100 million to settle lawsuits.

“The tippers and tippees have been in senior positions of trust and confidence,” told Ms Thomsen at recent compliance conference in Washington. “We are far from low-level employees or people on Main Street” said Ms Thomsen when expressing concern over “multiple incidences” of insider trading and cases involving professionals:

• Last week, a former Ernst & Young partner was charged with allegedly passing insider trading information to an investment banker friend ahead of seven deals involving the accounting firm’s clients (see recent posting on this case).

• In one of the most high-profile cases recently, 13 people, including a Morgan Stanley compliance officer and a UBS executive director, were charged in relation to an insider trading scheme.

According to Ms Thomsen the trend looks troubling and “the need to remind people of the consequences of this kind of behaviour is really acute,” she told.

SEC brought 47 insider trading cases last year, similar to the number in 2006. However, the number of defendants and respondents involved jumped 16% to 110 over that period and those involved have increasingly included people in senior positions such as partners, general counsels and compliance officers.

She said insider trading has also taken on a global nature, given the interconnectedness of markets. These and other types of enforcement issues therefore require greater global cooperation, and regulators are not just sharing information but “will be thinking about how to do global law enforcement”, she said.