In a recent statement to Time Magazine, SEC spokesman Scott Friestad indicated that several more individuals would likely face charges as the SEC continues its investigation over the next few months. Friestad also offered this background on how the insider trading scam that has so far felled 14 individuals - some from major New York banking institutions (UBS, Banc of America, Bear Stearns, Morgan Stanley), came to light:

"The investigation began as routine probe of suspicious high-volume trading prior to the acquisition of Catellas Development," said Friestad. The probe led to Eric Franklin, a hedge fund manager for Q Capital Investment Partners, LP, a Delaware limited partnership with offices in Fort Lee, N.J. "We linked those trades to Mr. Franklin and obtained trading records for Q Capital, and Mr. Franklin's own records for his personal account, and noticed that what they had in common was Morgan Stanley as the investment banker. We also noticed that a lot of the trading preceded upgrades and downgrades issued by UBS [Union Bank of Switzerland] and then the whole scheme began to unravel."

Read more on the insider trading investigation at Time Magazine. And for a run down of the 14 indicted so far, check out this Daily Caveat post from last week.

-- MDT

Labels: Andover Brokerage, Assent LLC, Banc of America, Bear Stearns, Catellas Development, Chelsea Capital, insider trading, Jasper Capital, Morgan Stanley, Q Capital, SEC, UBS