The SEC is Investigating S&P for Insider Trading on the DowngradeThe SEC is investigating whether there was any insider trading done by employees of Standard & Poor’s ahead of its credit downgrade of the U.S., the Financial Times reported late last week. The SEC’s examination staff, which oversees credit raters, has asked S&P to disclose who within the company knew about the downgrade before it happened. The commision indicated to FT that it is not aware of a leak from someone within the credit agency or an unusual trade. However, Market Watch reports that regulatory observers were calling for an investigation last week because of heavy trading volumes before the downgrade:
Regulatory observers are focusing, partly, on a heavy trading volume and a major sell off of equity securities at one point on Friday, responding to speculation rampant in the markets that S&P was going to downgrade the U.S. debt later that day. S&P did, in fact, lower the U.S. government’s top-tier credit rating late that day a notch to AA+.
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http://www.theatlanticwire.com/business/2011/08/sec-investigating-sp-insider-trading-us-downgrade/41249/