Saturday, May 16, 2009
The SEC's reputation suffers another blow, as both the Wall St. Journal and the New York Times report that the U.S. Attorney in D.C. is investigating whether some SEC enforcement division attorneys violated the insider-trading laws. A report by the SEC's Inspector General (which is available in a partially redacted version at the WSJ's website although it is designated nonpublic by the SEC) describes the trading activities of three unnamed enforcement division attorneys and finds that these activities may violate SEC internal rules. One attorney was a frequent trader, making 247 trades in a two-year period. All three met regularly to discuss trading and used their SEC email accounts to send personal messages about stocks. The report finds that the SEC has "essentially no" compliance systems to detect improper trading by its employees. WSJ, Insider Trading Probe at SEC; NYTimes, S.E.C. Lawyers Investigated for Insider Trading.