More subpoenas served in insider trading probe
By Matthew Goldstein and Svea Herbst-Bayliss |
December 9, 2010, Thursday
|
Print Edition
Print Edition
US Federal authorities have expanded an investigation into insider trading on Wall Street, bringing to more than one dozen the number of subpoenas sent to hedge funds and other investment firms over the past two weeks, people familiar with the inquiry said.
The new subpoenas signaled an intensification of one strand of a federal investigation focusing on funds that did business with so-called expert network firms. Those firms help investment managers meet industry experts to research a specific industry.
US stocks, which had broadly rallied earlier on Tuesday, retreated after a report about the new subpoenas, although investors blamed other factors for the market's about-face.
Last week, federal prosecutors in Manhattan sent more subpoenas to several large hedge funds, said the sources.
US authorities began subpoenaing big-name investors, including Wellington Management and SAC Capital Advisors, on November 22, the same day Federal Bureau of Investigation agents raided hedge funds in three states.
The initial subpoenas went to a handful of firms whose employees had worked with John Kinnucan, an independent analyst who does business under the name Broadband Research. FBI agents approached Kinnucan to have him record conversations with clients, but the Portland, Oregon-based analyst refused and alerted his contacts.
Kinnucan himself, who has become something of a folk hero on Wall Street for having defied the FBI, has now been served with a subpoena. The former hedge fund manager is suspected of having passed on non-public information about technology companies and now has to deliver two years worth of business documents to federal agents until December 13.
In a telephone interview Kinnucan said that he fully expects to be arrested by the FBI at some point. He said he has done nothing wrong.
The new subpoenas signaled an intensification of one strand of a federal investigation focusing on funds that did business with so-called expert network firms. Those firms help investment managers meet industry experts to research a specific industry.
US stocks, which had broadly rallied earlier on Tuesday, retreated after a report about the new subpoenas, although investors blamed other factors for the market's about-face.
Last week, federal prosecutors in Manhattan sent more subpoenas to several large hedge funds, said the sources.
US authorities began subpoenaing big-name investors, including Wellington Management and SAC Capital Advisors, on November 22, the same day Federal Bureau of Investigation agents raided hedge funds in three states.
The initial subpoenas went to a handful of firms whose employees had worked with John Kinnucan, an independent analyst who does business under the name Broadband Research. FBI agents approached Kinnucan to have him record conversations with clients, but the Portland, Oregon-based analyst refused and alerted his contacts.
Kinnucan himself, who has become something of a folk hero on Wall Street for having defied the FBI, has now been served with a subpoena. The former hedge fund manager is suspected of having passed on non-public information about technology companies and now has to deliver two years worth of business documents to federal agents until December 13.
In a telephone interview Kinnucan said that he fully expects to be arrested by the FBI at some point. He said he has done nothing wrong.
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