When the Securities and Exchange Commission announced its massive insider-trading bust against Galleon Management last month, SEC Enforcement Director Robert Khuzami gave a warning: “It would be wise for investment advisers and corporate executives to closely look at today’s case, their own internal operations, and the increasing focus and scrutiny on hedge fund trading by the SEC and others.”
Sobering words, certainly. Since at least 2006, the SEC has declared hedge fund insider trading to be a “top priority,” but it had never brought a case that really drove that message home—until now.
The SEC’s Galleon case and the parallel ...