By Svea Herbst-Bayliss and Rachelle Younglai
BOSTON/WASHINGTON, Oct 19 (Reuters) - U.S. financial regulators and federal prosecutors are pursing 'significant' insider trading cases involving financial professionals, a source familiar with the matter said on Monday.
The source declined to say whether the matter is related to one that ensnared billionaire hedge fund founder Raj Rajaratnam and executives from some of the largest U.S. companies.
When Mary Schapiro replaced Christopher Cox as SEC chairman earlier this year, a number of changes were made to help root of financial crimes.
Now staff attorneys no longer need to get permission from commissioners for a formal order of investigation or to use subpoenas. That power has been delegated to top enforcement staff, which insiders said streamlines the investigations process and has helped speed up the work they are doing.
'If you've just gotten a black eye, you need to vindicate yourself and show that you are no longer your grandfather's Buick,' said Ron Geffner, a former SEC enforcement attorney who is now a partner at law firm Sadis & Goldberg LLC.
The SEC's internal changes are quickly being felt by managers in the $1.4 trillion hedge fund industry.
Several hedge fund managers said they now expect to have SEC lawyers knock on their doors more routinely to review certain documents.
Since 2006, when a landmark case reversed the SEC's rule to have hedge funds register with the regulator, the industry has managed to stay largely out of the SEC's sight.
'They are paying extra attention to everything right now,' said Ian Roffman, a former SEC attorney who is now a partner at Nutter McClennen & Fish, adding 'we are in a period of very heightened enforcement activity.'
Roffman and other attorneys agree that the number of enforcement actions will go up this year and that the number of high-profile cases will also rise.
Several weeks ago the SEC told hedge fund manager Arthur Samberg that it plans to file civil insider-trading charges against him and Pequot Capital Management, the firm he shut down in May after the government reopened its investigation into the matter.
A report from risk consulting firm Kroll released on Monday found that increasing twice as fast in financial services as in other sectors with North America particularly hard hit by the financial crisis.
Traditionally insider-trading cases make up roughly 7 percent of enforcement cases.
On Friday, billionaire Rajaratnam, who founded Galleon Group in 1997, was charged with having having used a network of company insiders to tip him off to information that netted $20 million in illegal profits between 2006 and 2009.
(Reporting by Svea Herbst-Bayliss and Rachelle Younglai, editing by Leslie Gevirtz) Keywords: SEC INSIDERTRADING/ (Svea.Herbst@Reuters.com; +1 617 856 4331; Reuters Messaging: svea.herbst.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BOSTON/WASHINGTON, Oct 19 (Reuters) - U.S. financial regulators and federal prosecutors are pursing 'significant' insider trading cases involving financial professionals, a source familiar with the matter said on Monday.
The source declined to say whether the matter is related to one that ensnared billionaire hedge fund founder Raj Rajaratnam and executives from some of the largest U.S. companies.
When Mary Schapiro replaced Christopher Cox as SEC chairman earlier this year, a number of changes were made to help root of financial crimes.
Now staff attorneys no longer need to get permission from commissioners for a formal order of investigation or to use subpoenas. That power has been delegated to top enforcement staff, which insiders said streamlines the investigations process and has helped speed up the work they are doing.
'If you've just gotten a black eye, you need to vindicate yourself and show that you are no longer your grandfather's Buick,' said Ron Geffner, a former SEC enforcement attorney who is now a partner at law firm Sadis & Goldberg LLC.
The SEC's internal changes are quickly being felt by managers in the $1.4 trillion hedge fund industry.
Several hedge fund managers said they now expect to have SEC lawyers knock on their doors more routinely to review certain documents.
Since 2006, when a landmark case reversed the SEC's rule to have hedge funds register with the regulator, the industry has managed to stay largely out of the SEC's sight.
'They are paying extra attention to everything right now,' said Ian Roffman, a former SEC attorney who is now a partner at Nutter McClennen & Fish, adding 'we are in a period of very heightened enforcement activity.'
Roffman and other attorneys agree that the number of enforcement actions will go up this year and that the number of high-profile cases will also rise.
Several weeks ago the SEC told hedge fund manager Arthur Samberg that it plans to file civil insider-trading charges against him and Pequot Capital Management, the firm he shut down in May after the government reopened its investigation into the matter.
A report from risk consulting firm Kroll released on Monday found that increasing twice as fast in financial services as in other sectors with North America particularly hard hit by the financial crisis.
Traditionally insider-trading cases make up roughly 7 percent of enforcement cases.
On Friday, billionaire Rajaratnam, who founded Galleon Group in 1997, was charged with having having used a network of company insiders to tip him off to information that netted $20 million in illegal profits between 2006 and 2009.
(Reporting by Svea Herbst-Bayliss and Rachelle Younglai, editing by Leslie Gevirtz) Keywords: SEC INSIDERTRADING/ (Svea.Herbst@Reuters.com; +1 617 856 4331; Reuters Messaging: svea.herbst.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.