Wednesday, December 19, 2012

Worried About Insider Trading?

We’ve noticed an increased appetite for anything related to hedge fund due diligence and compliance.

Today’s headlines are filled with stories of hedge fund managers accused of insider trading.

The question is how should investors react to the increasing number of insider trading cases splashing the front of the Wall Street Journal?

Some experts, including some of the fine folks we have lined up to speak for GAIM Ops Cayman, say you may not need to react at all.

Clearly insider trading is an important issue and should be on everyone’s mind, especially when you are evaluating a new investment.  However, if you are currently invested in a fund that is going through an investigation, remember –innocent until proven guilty.

The SEC has beefed up their enforcement team and is on high alert for high profile cases.  In FY 2012, the SEC opened 734 enforcement actions, flat with the735 that were opened in FY 2012, with only 58 of these cases for insider trading, according to the SEC.

In actuality, most SEC enforcement actions do not end with a conviction, but that is not what the media and court of public opinion would have you believe.  So, why is the media obsessed with hedge funds?

You can find out more this April at GAIM Ops Cayman, where  Dan McCrumfrom the Financial Times and Maneet Ahuja from CNBC  and Author of The Alpha Masters will examine this topic further and provide insight into insider trading.


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