Reported by Chris Prentice
The U.S. Securities and Exchange Commission is scrutinizing whether investment advisers and other firms have strong enough policies to ensure nonpublic information is not misused to gain an illegal edge in trading, a top official told Reuters.
The SEC is looking to crack down on ineffective policies and procedures as part of broader insider trading scrutiny, Gurbir Grewal, the SEC’s enforcement director, said in a recent interview. Under Democratic leadership, the agency has sought to charge more individuals for misconduct and pushed for higher penalties when negotiating with companies to resolve investigations into compliance violations and misconduct.i
“The frustration with insider trading is that sometimes the threat of jail and penalties don’t prevent it,” Grewal said. “So we have to emphasize the tools we have and the firms need to tighten up their policies to prevent abuse.”
The SEC’s efforts are aimed not just at insider trading in equity markets, but also potential use of complex financial tools including swaps or derivatives to benefit from non-public information or to mask misconduct, he said.
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