NYSE Insider Trading Cases at Record High in 2008 as 'Pillow Talk' Increases
The New York Stock Exchange referred a record 146 suspected cases of insider trading to the U.S. Securities and Exchange Commission last year, topping the previous year’s record by five cases.
However, hedge funds played much less of a role in the overall number of cases than they did in 2007, and were involved in only 54 percent of last year’s referrals, compared to 72 percent the year before, reports Compliance Week (sub. req.).
As hedge funds apparently reversed course from their previous buying mode at the conclusion of last year, though, an increasing number of worried corporate insiders may have been crossing the line by executing sell orders before bad news became public knowledge—and advising friends and family to do the same.
Such “pillow talk” is a disturbing trend that drove a significant number of SEC referrals last year, says attorney Thomas Gorman of Porter Wright Morris & Arthur. “That’s something that we’ve seen more and more.”
