Feds Start Raids in Massive 3-Year Insider-Trading Probe of Financial Industry
Following news over the weekend from the Wall Street Journal that an insider-trading probe of unprecedented scope is underway in the financial industry comes word today from the newspaper that the FBI has apparently gotten the ball rolling on enforcement by raiding the offices of three hedge funds in Boston and Connecticut.
No charges or civil complaint apparently have yet been filed against these three hedge funds or any other financial entity under investigation in the three-year probe, according to today’s Journal (sub. req.) article.
However, the overall investigation could potentially “expose a culture of pervasive insider trading in U.S. financial markets” and “multiple insider trading rings reap[ing] illegal profits totaling tens of millions of dollars,” states the Journal in an article on Saturday that is no longer available online in its original location.
The criminal investigation is looking at how independent analysts and research entities pass along information, says another Journal article today.
It quotes one of those to whom the feds have paid a visit, John Kinnucan of Portland, Ore., as recounting his conversation with the “fresh-faced eager beavers” in a subsequent e-mail to clients and telling them he believed the FBI has been monitoring his cell phone for some time.
Kinnucan says he has done nothing wrong, and describes the experience of talking to the feds as “like a street mugging. They were hammering me from either side.”
