SEC Exposes Wall St. Insider Trading Ring

Mar 1 2007 | 8:12pm ET

The Securities and Exchange Commission has charged fourteen defendants, some representing Wall Steet’s crème de la crème and a few hedge funds, with insider trading.   According to the SEC, these insiders allegedly serially traded on material, nonpublic information tipped, in exchange for cash kickbacks, by other insiders at UBS Securities and Morgan Stanley.

In one scheme, which has allegedly been ongoing since 2001, at least eight professionals, three hedge funds, two broker-dealers and a day-trading firm made thousands of illegal trades and millions of dollars in profits using inside information misappropriated by a UBS executive to trade ahead of UBS analyst recommendations.

In a second scheme, several securities professionals and a hedge fund made dozens of illegal trades and hundreds of thousands of dollars in profits using inside information misappropriated by an attorney at Morgan Stanley to trade ahead of corporate acquisition announcements. Collectively, the SEC alleges that the defendants made at least $15 million in profits from these two insider-trading schemes.

The hedge funds in question include Lyford Cay Capital, a hedge fund at Bear Stearns, Q Capital Investment Partners and Chelsey Capital.

The SEC's complaint seeks permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the payout of civil monetary penalties.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...