• 23
  • January
    2012

Federal law enforcement authorities are continuing to target insider trading. Most recently, federal prosecutors in Manhattan charged seven individuals with insider trading of Dell computer stock.

According to documents filed in federal court, a stock analyst who used to work at computer giant Dell kept in close contact with his former colleagues, including one high-level executive, and often used inside information about the company's financial results in trading stocks. In addition to making these trades himself, the analyst also shared the illegal tips with six others in the industry. As a result, federal prosecutors allege that illegal trading occurred across the country, with several fund and trust managers located in California, Connecticut and New York.

Altogether, federal investigators believe that the seven investment professionals and their companies managed to make over $63 million off of the insider information.

Last Wednesday, the seven were charged in a federal district in Manhattan with the crime of trading on illegal stock tips. The former Dell employee has pleaded guilty to the charges and, according to the New York Times, is cooperating with the government.

These white collar criminal charges are the latest in a federal sting targeting insider trading. In the last few years, as part of "Operation Perfect Hedge" federal agencies have taken a tough stance on insider trading, bringing charges in dozens of cases. This operation has led to more than 60 guilty pleas or convictions.

The SEC has also filed a civil lawsuit against the seven defendants.

Source: New York Times, "U.S. Charges 7 for Insider Trading of Dell Stock," 1/18/12.