SEC Probing ETF Use to Mask Insider Trading

Published by: Frank Galvano on 10th Feb 2011 | View all blogs by Frank Galvano
SEC Probing ETF Use to Mask Insider Trading

The U.S. Securities and Exchange Commission has reportedly launched an investigation into whether traders are using exchange-traded funds as a tool to disguise insider trading activity.  Sources familiar with the probe say that ETFs have emerged as a mechanism for maximizing gains in stocks while masking trading patterns.

For example, a trader might receive inside information about a stock, purchase an ETF that includes the stock, and short sell the other stocks in the ETF.  Known as ETF-stripping, the practice allows traders to benefit from gains in the stock's value without directly buying or selling the stock.

SEC regulators, working with officials from the US Justice Department, are concerned that traders may be using the approach to hide insider trading.  Investigators are also looking into whether are using the practice to avoid regulator detection.  The recently passed Dodd-Frank finance reform legislation will require a portion of ETF swaps to trade on exchanges.

Comments

0 Comments

     
Please login or sign up to post on this network.
Click here to sign up now.

Latest DT's

  • View DT's
    Here's a great bio that Full in Bloom did for the band Possessedhttp://fullinbloommusic.com/biography-possessed.html View DT's
    3 years ago by Geno
  • View DT's
    Rated: PG-13 In Theaters: January 24th Director: Stuart Beattie Starring: Aaron Eckhart, Bill Nighy, Yvonne ... View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: PG-13 In Theaters: January 10th Director: Renny Harlin Starring: Kellan Lutz, Gaia Weiss, Scott Adkins View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: R In Theaters: December 4th Director: Scott Cooper Starring: Christian Bale, Casey Affleck, Zoe Saldana, Sam ... View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: PG-13 In Theaters: December 13th Director: Peter Jackson Starring: Ian McKellen, Martin Freeman, Richard ... View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: R In Theaters: January 3rd Director: Gregory Plotkin Starring: Andrew Jacobs, Jorge Diaz, Gabrielle Walsh View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: TBD In Theaters: February 7th Director: George Clooney Starring: George Clooney, Matt Damon, Bill Murray, Cate ... View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: PG-13 In Theaters: January 17th Director: Tim Story Starring: Ice Cube, Kevin Hart, John Leguizamo, Bruce ... View DT's
    3 years ago by dallaseste
  • View DT's
    Rated: R In Theaters: January 17th Directors: Matt Bettinelli-Olpin, Tyler Gillett Starring: Allison Miller, Zach ... View DT's
    3 years ago by dallaseste

Top Authors

Subscribe