FBI probes possible insider trading by SEC lawyers

From AP article [emphasis mine]:

"Federal prosecutors and the FBI have been investigating possible illegal insider trading by two Securities and Exchange Commission enforcement attorneys who were in a position to receive sensitive information about agency probes of public companies.

"The SEC's inspector general, David Kotz, found that the frequent stock trades over a two-year period by the pair raised suspicions of insider trading. Earlier this year, he referred the matter to the Fraud and Public Corruption Section of the U.S. attorney's office in Washington.

"The SEC enforcement attorneys, one male and one female, each earn more than $160,000 annually and had stock portfolios estimated to be worth more than that, according to Kotz's report. They often e-mailed each other about stocks and their trades, it said. The attorneys and the companies whose stock they were said to have traded weren't named.

"... they both traded in the stock of a large financial company after being told by a colleague about investigations of the company, a violation of SEC rules, according to the report.

"Two months before an SEC investigation of a large health care company was opened, according to Kotz's report, the female attorney sold all her shares in the company. She traded stocks 247 times between in 2006 and 2007, the report said."

247 times. That would have earned her the gold-level pricing on my brokerage account...

"Both attorneys "inexplicably" testified to investigators that they failed to see how sending e-mails to the male attorney's brother and sister-in-law from his SEC account could create the appearance that he was improperly sharing nonpublic information with someone outside the SEC, the report says."

Create the appearance? That's an understatement. But SEC has this to say:

""We take seriously even the suggestion that any SEC employee would engage in insider trading," according to a statement from the agency. "We note that the (inspector general's) report neither accuses any SEC employee of insider trading nor concludes that any such conduct took place.""

As long as you don't openly say it, it's OK. No one has done anything wrong.

Remember the recent headline on another insider-trading/conflict of interest case? Proverbial tip of the iceberg that no one cares, because "we are moving forward not backward"?

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