Rumors about SAC Capital Advisors are at the center of the Securities and Exchange Commission’s probe into potential market manipulation of Lehman Brothers Holdings stock.
In its investigation of rumor-mongering on Wall Street, the regulator is focusing on four in particular. In addition to SAC, they are the Federal Reserve’s lending facility, Barclays and PIMCO, The Wall Street Journal reports. The rumors indicated that concern about Lehman’s financial well-being had led customers such as SAC to take its business elsewhere.
The rumor that SAC and PIMCO were closing their accounts at Lehman pushed the bank’s shares down by as much as 21% on July 10, before both firms denied that they were ending their relationships with Lehman.
The SEC is seeking phone call transcripts, messages and payroll documents that mention the four names suggested in the rumors. The regulator sent dozens of subpoenas in recent weeks as part of its rumor-mongering probe to hedge funds and other firms.
The agency is also looking into hedge funds’ internal compliance systems in an effort to prevent future rumors spreading like the Lehman rumors, or rumors that helped doom Bear Stearns in the weeks prior to its demise.