NYSE Links Insider Trading Spike To HFs

NYSE Regulation says it expects to refer more than 25% additional potential insider trading cases to the Securities and Exchange Commission, and it says hedge funds may have something to do with the rise.

NYSE Regulation says it expects to refer more than 25% additional potential insider trading cases to the Securities and Exchange Commission, and it says hedge funds may have something to do with the rise. Robert Marchman, executive v.p. of the New York Stock Exchange regulatory unit told a Senate Judiciary Committee hearing that his agency has seen “a significant increase in the number and complexity” of its insider-trading referrals, along with a spike in “insider trading issues related to hedge fund activity.” The testimony came a day before the House of Representatives was set to vote on a measure by Rep. Michael Castle (R-Del.) to embark on a federal study on hedge fund oversight. Meanwhile, a recent study by Measuredmarkets discovered that four out of 10 mergers and acquisitions worth more than $1 billion had some “deviant trading behavior” before it. The researcher didn’t make a hedge fund connection, but Professor John Coffee of Columbia University School of Law told the hearing that “intense competition” for better returns by hedge funds has resulted in more insider trading.