The U.S. Securities and Exchange Commission (SEC) is probing whether traders are using ETFs as a means of disguising insider trading, Financial Times reports. The practice, known as ETF-stripping, will let investors gain from movements in the company’s share price without directly buying or selling the stock.
The SEC is also investigating whether traders are using swaps. The Dodd-Frank bill will require a portion of swaps to trade on exchanges.
Click here for the story from Financial Times.