Watchdog alert over return of insider trading

Insider trading on Wall Street is starting to look as troubling as it was in the time of Ivan Boesky in the 1980s, the head of enforcement at the US Securities and Exchange Commission warned on Wednesday.

Linda Chatman Thomsen, the SEC’s director of enforcement, said she had been “quite dismayed” at the nature of the commission’s recent insider dealing actions.

“The tippers and tippees have been in senior positions of trust and confidence,” she said. “We are far from low-level employees or people on Main Street.”

Ms Thomsen expressed concern at the “multiple incidences” of insider trading and cases involving couples who were both professionals.

Last week, a former Ernst & Young partner was charged with allegedly passing insider trading information to an investment banker friend ahead of seven deals involving the accounting firm’s clients.

In one of the most high-profile cases recently, 13 people, including a Morgan Stanley compliance officer and a UBS executive director, were charged in relation to an insider trading scheme.

Ms Thomsen said the trend was “quite troubling”, adding that the “quality and behaviour” found in recent cases reminded her of the days of Ivan Boesky and Dennis Levine, who were at the centre of one of the most pervasive insider trading rings in Wall Street history.

“The need to remind people of the consequences of this kind of behaviour is really quite acute,” she told a compliance conference in Washington on Wednesday.

The SEC brought 47 insider trading cases last year, similar to the number in 2006. However, the number of defendants and respondents involved jumped 16 per cent to 110 over that period and those involved have increasingly included people in senior positions such as partners and general counsel.