U.S. Builds Massive Insider-Trading Case Against Investing Pros

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The government is about to spring the trap on people it alleges have engaged in insider trading. The case has been built over a three year period.

The Wall Street Journal reports, "The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars." Charges could be brought before the end of this year, according to the Journal.

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The probe is focusing on people who made money by trading on information about corporate plans before they were made public to investors. So-called expert networks (which hire individuals with working knowledge of an industry or company to speak directly with traders and investors) are a part of the focus. The paper reports that "Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries."

Potential leaks of information by Goldman Sachs Group (GS) investment bankers are also part of the investigation. Among other firms the government probed are Broadband Research and First New York Securities, according to the Journal.

The FBI and Justice Department spearheaded the investigations. The probe is not entirely finished and it is not clear when the first charges will be brought.
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