Home ListingJuly 18, 2014

SEC Investigates 44 Investment Firms on Insider Trading

US regulators have claimed dozens of prominent hedge funds and asset managers were part of an insider-trading scheme involving health care companies.

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The US Securities and Exchange Commission (SEC) has widened an insider-trading investigation against congressional staff to a dozens of hedge funds, asset managers, and investment firms.

According to recent court filings, the SEC said a total of 44 investment entities—including “some of the largest hedge funds and asset management advisors in the nation”—might have been involved with insider trading in April last year.

Of the 44 funds cited in the memo, 25 are based in New York, the SEC said. Others are based primarily in Connecticut, Massachusetts, Illinois, and California, the regulators added.

Original court filings said the House Ways and Means Committee and a top staff member had allegedly leaked non-public information about a change in health-care policy.

“Some of the largest hedge funds and asset management advisors in the nation” might have been involved with insider trading in April last year, the SEC said.

The SEC claimed the tip was disclosed to an analyst at research firm Height Securities who sent clients a “flash alert” report concerning the policy change mere minutes before the government announcement. Stock prices of insurance companies such as Humana surged as a result.

“The Humana investigation is substantially concerned with the investor clients of Height Securities who received the subject Height e-mail, and who the commission believes may have engaged in relevant trading on April 1,” the SEC said in the court filing.

The SEC did not named the investment firms that were allegedly involved in insider trading, but the Wall Street Journal reported that Viking Global Investors and formerly SAC Capital Advisors were among the funds allegedly taking part in the trading.

The regulators subpoenaed the House committee and staffer for documents citing a 2012 law that prohibits public officials from disclosing government matters that could sway stock prices.

Both parties are have asked the court to dismiss the subpoenas saying staff members are “absolutely immune.”