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FBI insider trading investigations get more serious

Marketplace Staff Nov 23, 2010
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FBI insider trading investigations get more serious

Marketplace Staff Nov 23, 2010
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TEXT OF INTERVIEW

JEREMY HOBSON: That wide ranging investigation into insider trading that we’ve been talking about the last couple days is getting more serious. FBI agents have seized documents in coordinated raids at different hedge funds in New York, Connecticut and Massachusetts.

Our Washington Bureau Chief John Dimsdale is with us live with the latest. Good Morning John.

JOHN DIMSDALE: Hell Jeremy.

HOBSON: What’s the FBI looking for in these raids?

DIMSDALE: This is a 3-year old investigation into the trafficking of corporate secrets, the kind of information that can move markets, things like confidential merger talks, or maybe a new product in the pipeline. Investigators have discovered there are growing number of firms or professional groups who get inside tips and then sell them to hedge funds, which are those big investment funds that only are for very wealthy players.

HOBSON: And is the timing important in these raids, John? Why is this happening now?

DIMSDALE: It’s partly because of the growing number of these groups that traffic in inside information. But that’s a good qusetion because insider trading is no recent phenomenon. In fact, Wall Street lawyer Bill Singer says it’s been going on for generations and these investigations are unnecessarily shaking up markets because the investigators have been too slow to bring charges.

BILL SINGER: The uncertainty as to which hedge funds will be indicted and brokerage firms will be indicted has injected such an amount of panic the last day or two in the market that it’s obviously going to drive prices down a bit and shareholders will be hurt.

HOBSON: Shareholders will be hurt, John, what happens next?

DIMSDALE: We’ll we’re expecting charges and maybe arrests before the year is out. And it could hit some of the biggest names on Wall Street including Goldman Sachs.

HOBSON: Marketplace’s John Dimsdale in Washington, thanks.

DIMSDALE: Thank you.

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