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SEC insider trading cases hit record in 2008
October 22, 2008 / 5:00 PM / in 9 years

SEC insider trading cases hit record in 2008

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission said on Wednesday it had brought the highest number of insider trading cases in its history during the 2008 fiscal year that ended September 30.

The SEC also said the 671 enforcement actions of all types was the second highest on record.

“The SEC’s role in policing the markets and protecting investors has never been more critical,” said SEC enforcement director Linda Thomsen in a statement. “The staff’s commitment is unwavering year-in and year-out.”

The SEC’s enforcement division has been criticized in recent weeks by its own internal watchdog and lawmakers.

The SEC’s inspector general found earlier this month that an SEC regional director failed to vigorously enforce securities laws in a 2003 investigation into Bear Stearns’ pricing of collateralized debt obligations.

The inspector general found in a separate report released in October that the SEC should discipline Thomsen and two supervisors for their role in an insider trading probe.

And this week, Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee, wrote to SEC Chairman Christopher Cox, citing “anonymous but specific” information on what he called inappropriate contact between SEC’s enforcement director and JPMorgan’s general counsel while the investment bank was mulling a bid for Bear Stearns.

The SEC declined to comment on Grassley’s letter.

The agency said on Wednesday that for the just-completed fiscal year, the number of insider trading and market manipulation cases rose more than 25 percent and 45 percent, respectively, over the prior year.

The SEC cited a number of high-profile cases, including its case against two Bear Stearns hedge fund managers involving charges they fraudulently misled investors about the financial state of the firm’s two largest hedge funds.

The investor protection agency also said it has reached preliminary settlements with six of the largest firms in the auction rate securities markets, which could return more than $50 billion to investors.

Reporting by Karey Wutkowski; Editing by Tim Dobbyn

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