The Securities and Exchange Commission has subpoenaed over 50 hedge fund advisors, including SAC Capital Advisors, Goldman Sachs Group Inc., and Citadel Investment Group, as part of its probe into whether rumors affected the shares of Bear Stearns and Lehman Brothers.
The SEC is looking for information related to options trading and short-selling involving the two investment firms. The subpoenas are part of a wider investigation about trades in bank securities and the communications between the hedge funds and others. The SEC has reassured the parties being subpoenaed that they are not necessarily direct targets of the probe.
Last week, regulators announced that they are investigating whether certain managers had spread rumors to cause share prices to drop. Investigators are also trying to figure out whether correct policies and training procedures had been put in place to detect market manipulation.
The NYSE Euronext’s regulatory arm and the Financial Industry Regulatory Authority are also working together to find out about the compliance polices of certain large securities firms related to rumors and false information. The companies are being asked whether they executed internal probes about the rumors related to the sub-prime loan business, a potential federal government bailout affecting several financial institutions, and the use of the Federal reserve discount window.
As a result of the subpoenas, broker-dealers and hedge funds are rushing to provide regulators with trading records and e-mails.
If you believe that you are a victim of securities fraud, please contact Shepherd Smith Edwards & Kantas LTD LLP for your free consultation with one of our experienced stockbroker fraud lawyers today.
Related Web Resources:
Firms hurry to comply with SEC subpoenas, Boston.com, July 17, 2008