November 21, 2010 in Nation/World

Lengthy insider trading probe reported

Arrests in ‘double digits’ likely in case, sources say
Richard A. Serrano Tribune Washington bureau
 
Associated Press photo

U.S. Attorney Preet Bharara speaks to reporters Wednesday.
(Full-size photo)

WASHINGTON – Federal investigators in New York are wrapping up an extensive investigation into allegations of insider trading and other stock-trading irregularities that could bring criminal charges or monetary fines against a large number of Wall Street executives and investors, a Washington official who has been briefed on the probe said Saturday.

Speaking anonymously so as not to jeopardize the case, the official said the investigation has been under way for “several years” and is likely to result in the prosecution of traders “around the country.”

“They are in the final stages with this,” the official said. “It could bear fruit by the end of this year.”

Speculation first arose that the FBI and other federal investigators were nearing the end of several years of investigation into irregularities when Preet Bharara, the U.S. attorney in Manhattan, gave a speech in October warning that “illegal insider trading is rampant and may even be on the rise.”

News that investigators were nearing the end of their probe was first reported Friday night on the Wall Street Journal’s website. The newspaper said the investigation “could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts.”

Other sources close to the investigation described the effort as a “big case” and speculated that the number of people likely to be arrested could be in the “double digits.”

Already, nearly two dozen people have been charged with insider trading in recent years in a separate insider trading investigation that Bharara has termed “the largest hedge fund insider trading case in history.”

But the current investigation could top the size of the other cases. “We are taking this very seriously,” the government official said.


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