The US government has identified 14 people whom it suspects of insider trading. The accused include influential financial company employees, brokers, lawyers and hedge fund managers. Together, they made 15 million USD on the basis of insider information, making this probably the biggest case of insider dealing of the last thirty years.
The Securities and Exchange Commission (SEC) has charged fourteen people with insider trading. The British publication, Hedge Week , reports that a spokesman for the Commission said that the accused had made 15 million USD on several thousand stock market trades using information stolen from UBS Securities and Morgan Stanley.
According to the prosecutor, eight Wall Street professionals took part in two related cases of insider trading including the UBS director of research, a lawyer from Morgan Stanley, two brokers, and a day-trading firm (which speculates on securities over the course of one trading session). As a result of these illegal moves, two hedge funds in particular made large gains. The illegality of their operations really stems from the fact that the stock market trading participants knew ahead of time about the results of a UBS analytical research report as well as about the investment bank Morgan Stanley’s merger and client absorption deals.
Spokesmen for the Commission insist that people from UBS were behind this criminal enterprise. They exchanged information using secret codes and mobile phones which they later destroyed. In addition, they did not fight shy of giving bribes and kickbacks.
Four of the suspects have already confessed. The rest are protesting their innocence. The court has released them on bail set at 500,000 USD each. The maximum sentence for each of the charges is up to 20 years in prison.
Denis Zenkin, InfoWatch’s Marketing Director said, “Unfortunately, this is the kind of leak which no technology can protect against since a person can easily commit the necessary facts to memory, such as the names of a company which someone intends to take over, or the firms whose ratings UBS analysts intend to raise. Added to this, is the fact that it was people at the highest levels in these companies who were embroiled in this, people who – by dint of their positions – have access to important information. We should applaud the effectiveness of the Securities and Exchange Commission’s investigators who managed to connect the dots between the suspects and uncover the information streams.”
