SEC touts its crackdown on insider trading
Always a high priority, the agency has significantly boosted the number of cases brought against Wall Street traders and hedge-fund managers, according to data it released to Congress late last week.
That effort was punctuated by the huge insider-trading case against Raj Rajaratnam, which resulted in a $92.8-million civil penalty. That was in addition to the criminal conviction of the prominent hedge-fund manager, which was spearheaded by the Justice Department.
The SEC said it lodged 53 cases against 138 people and corporate entities in fiscal 2010, a 43% increase from the prior year. It said it filed 57 cases against 124 people and entities this year.
The agency also has developed new investigative techniques, including the creation of a market abuse unit that focuses on a variety of practices, including complex insider-trading cases, the agency enforcement chief, Robert Khuzami, told the Senate Committee on Homeland Security and Governmental Affairs last week.
“The increased number of insider trading cases has been matched by an increase in the quality and significance of our recent cases,” Khuzami said.
The SEC has come under scrutiny lately after a federal judge criticized its practice of settling cases of alleged fraud without requiring the companies and executives involved to admit guilt.
Its insider-trading credibility won't diffuse that issue, but it may give the agency some breathing room against those who say it hasn't done enough to stanch Wall Street wrongdoing.
-- Walter Hamilton
Photo: Raj Rajaratnam; Credit: Peter Foley / Bloomberg