The U.S. Securities and Exchange Commission charged seven individuals, including a handful of Wall Street professionals, that it claims were involved in an insider trading ring that generated more than US$11.6 million in illegal profits and avoided losses.

The SEC alleges that two mergers and acquisitions professionals tipped five individuals including a portfolio manager for a hedge fund, with material nonpublic information about three impending corporate acquisitions. Related criminal charges by the U.S. Attorney’s Office for the Southern District of New York were also unsealed against several of the accused.

The SEC’s complaint alleges that the illicit trading occurred from at least November 2005 through December 2006 and involved at least the following acquisitions: Albertson’s Inc., ElkCorp., and National Health Investors, Inc.

“The commission and the public expect Wall Street professionals to act with the highest degree of ethics and integrity. It is unconscionable when these highly paid individuals abuse their access to sensitive information and enrich themselves at the expense of others,” said Scott Friestad, deputy director of the SEC’s Division of Enforcement. “As today’s actions demonstrate, we are aggressively working to combat insider trading wherever it occurs and whoever is involved.”

Daniel Hawke, director of the SEC’s Philadelphia office, said that the charges, “are the direct result of innovative investigative techniques that the SEC is using to identify patterns of unlawful trading and suspicious relationships among traders who, in this case, live around the world. Market professionals who may have engaged in insider trading, or may be tempted to, cannot rest comfortably in the belief that their wrongdoing will go undetected. We will continue to follow leads wherever necessary to unwind intricate schemes and will seek all available remedies against those who engage in unlawful conduct.”

The SEC is seeking injunctive relief, disgorgement of illicit profits and losses avoided with prejudgment interest, and financial penalties.

IE