‘A Challenge’
Douglas Leff, assistant special agent in charge of the New York office of the Federal Bureau of Investigation, said “it’s always a challenge for us to get records that are in the control of countries other than the U.S.”
If a country doesn’t recognize insider trading as a crime, “it’s harder for us to investigate,” Leff said in an interview. At the same time, there’s a “significant amount of mutual assistance” from other nations, and traders operating illegally overseas may be arrested if they come to the U.S. or another country with a U.S. extradition treaty, he said.
InterMune Probe
Trades in InterMune stock are also tied to the U.S. insider trading probe of hedge fund SAC Capital Advisors LP, now the focal point of a five-year crackdown by federal prosecutors, according to a person with knowledge of the matter. The person asked not to be identified because the matter isn’t public.
The SEC has filed at least 10 emergency action cases related to overseas trades since 2010, compared with only three over the previous two years. The 10 cases involved traders in China, Switzerland, Hong Kong, Singapore, Spain, Belgium, Lebanon and Austria, according to court records. In total, the SEC claimed illegal profit of $32 million.
“When you freeze money, it has a way of getting people’s attention,” Daniel Hawke, director of the SEC’s Market Abuse Unit, said in an interview. “People don’t walk away from it.”
In each case, the regulator argued profits would vanish overseas without an emergency asset freeze. Judges have always granted the agency’s request.
“There are a significant number of cross-border transactions that include non-U.S. advisers -- lawyers, auditors, investment bankers -- so it’s not just insiders who we’re looking at in these investigations,” Scott Friestad, the SEC’s associate enforcement director, said in an interview. “This multiplies the potential for leaks around the world.”
Increased Globalization