SEC Examines Hedge Fund Tip-Offs

Date: Thursday, February 8, 2007
Author: HedgeCo.net

HedgeCo.Net (New York) - The Securities and Exchange Commission is investigating whether hedge funds are being tipped off about buy and sell orders placed by mutual funds.

The Federal regulators that are conducting the probe, have asked approximately 10 major Wall Street banks for trading information from the last two weeks of September 2006, at the close of the third quarter.

It's become difficult for hedge fund managers to make money without access to sensitive information, so the SEC examiners will try to determine whether big buy and sell orders placed with the banks by mutual funds in that period triggered any suspicious front-running activity in those same stocks by hedge fund managers or other traders.

Lori Richards, director of the SEC's Office of Compliance, Inspections and Examinations, confirmed that her office was looking into the matter. "We're always concerned about information leakage in the market which could harm investors," she said.

Details of the investigation first appeared Tuesday in the New York Times, which said that the SEC request for information had gone out in mid-January.

Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net