The SEC is Going to Regulate (At Last) But Misses the Real Economic Terrorism By an Inch or Two
I wonder if the SEC has ever heard of the term "too little too late"? It might apply here. Come bring all the SEC goons you have to say regulation is making a comeback, this doesn't smell right and as usual, the SEC is preening for the sake of, well, the show. Fuck off and do something or go away.
The U.S. Securities and Exchange Commission will focus on financial instruments such as derivatives as it broadens a crackdown on insider trading by hedge funds, enforcement director Robert Khuzami said.
“The days of insider-trading scrutiny being focused almost solely on the equity markets are now gone,” Khuzami said today at a New York legal conference on hedge-fund regulation. After bringing its first insider trading case tied to credit default swaps in May, the SEC will “roll back the curtain on those markets and look at patterns across all markets,” he said.
Insider trading has become “systemic” behavior in the hedge-fund industry and the SEC is working with criminal authorities to ferret out misconduct, Khuzami said this month. Billionaire Raj Rajaratnam and his New York-based Galleon Group are among more than 20 people and firms the agency has sued since Oct. 16 in its probe of hedge funds.
The SEC brought its first insider-trading case tied to credit-defaults swaps in May, when it sued a Deutsche Bank AG salesman on claims he illegally fed information on a bond sale to a hedge-fund money manager. Prices on credit-default swaps, which insure investors against bond defaults, have surged before corporate takeovers in recent years, fueling speculation that traders are abusing inside information. The SEC has said since at least 2007 that it’s examining the trades.
Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. The contracts, typically expiring after five years, pay if a borrower fails to meet obligations.
Khuzami, in an interview today, declined to say whether the SEC has any current insider-trading investigations involving derivatives.
If Khuzami is so qualified with his background in sniffing out terrorism, perhaps he should start looking at the guys who refuse to say where all that money they printed went? I don't have time to blow your whistle, go do something useful and figure that out. It is, after all, the largest systemic risk we face. If it's obvious to me - some random tattooed hipster girl with a Fed fetish - certainly it should be painfully obvious to the SEC. Yeah. OK.