SEC lawyers probed for insider trading: report

Agence France-Presse | May 16, 2009

US authorities are probing two lawyers at US Securities and Exchange Commission for suspected insider trading, the Wall Street Journal reported Saturday.

Citing a SEC inspector general report, the financial daily said there were "multiple suspicious cases" of the lawyers trading stocks of companies under investigation.

The commission is normally the investigator of potential insider trading violations, but instead the case has been taken up by the US attorney's office in Washington and the FBI.

The lawyers were not named in the report, but the Journal said one -- a female staff lawyer -- had been with the SEC for 28 years, and other is a man working in the enforcement division's chief counsel office.

The daily did not cite specific allegations, including profit gained by the suspects from their trades.

A violation of internal SEC rules is not an automatic crime. For insider transactions to become illegal the trading would need to use nonpublic material information.

The SEC report said the two denied all wrongdoing, according to the Journal.

The commission is still in recovery following the scandal involving its apparent failure to uncover the alleged 50 billion dollar investment scam run by mastermind Bernard Madoff.

The commission's enforcement director Linda Chatman Thomsen resigned in February over the criticism.

SEC chief Mary Shapiro vowed to revamp the commission's enforcement efforts following the Madoff case, which erupted in December.