Hedge Funds-, Private Equity-Related Insider-Trading Probes Up

The percentage of Securities and Exchange Commission investigations into hedge fund- and private equity-related corporate takeovers are up for the third year in a row, according SEC Chairman Christopher Cox.

The percentage of Securities and Exchange Commission investigations into hedge fund- and private equity-related corporate takeovers are up for the third year in a row, according SEC Chairman Christopher Cox. In the fiscal year ending September, 20% of all SEC takeover probes involved HFs and p.e. firms, compared with 18% of the total in 2005 and 17% in 2004. “Of course, insider trading is something the commission has attended to as a matter of its central responsibilities,” Cox said in a press conference, noting that the topic was “high on the agenda” at the recent meeting of the President’s Working Group on Capital Markets. Cox said the group asked him “what we might do with our existing authorities and what we might do with different authorities.” But as well-known, the SEC famously failed to score when it tried to impose regulations on hedge funds earlier this year. Meanwhile, the U.K.’s Financial Services Authority, in a stunning change from its earlier softer approach to HF regulation, has come down hard the industry it is increasingly watching. Speaking at a forum in New York, Margaret Cole, the FSA’s director of enforcement, says hedge funds are “testing the boundaries of acceptable practice with respect to insider trading and market manipulation.” The different tune the FSA is now singing apparently has come in light of gloom-and-doom comments from the Bank of England, and joins a growing chorus of criticism of the industry, which one media source says has come “out of the blue.” Or, perhaps, out of the Amaranth Advisors debacle.