Former Wells Fargo & Co. investment banker John Femenia was charged in Charlotte, N.C., last week with leading an $11 million insider-trading ring that paid kickbacks in cash and gold for tips on corporate mergers.
In Santa Ana, Calif., former Major League Baseball player Doug DeCinces was charged last month with making $1.3 million on tips he got from an executive at a medical eye-products company. In Newark, N.J., U.S. prosecutors charged executives at three health-care companies Nov. 19 with trading on illegal information.
Insider trading has moved beyond its traditional Wall Street confines - and the U.S. government has followed. Investigators and self-regulatory bodies are working more closely and adopting new tactics to detect lawbreakers wherever they trade.
On Friday, Mathew Martoma, an ex-SAC Capital Advisors L.P. portfolio manager, was indicted in what prosecutors called the biggest insider-trading case in history. Martoma, 38, is accused of using illegal tips about a clinical trial of an Alzheimer's disease drug to help hedge fund SAC profit by $276 million.
"I don't recall a time in history where this many U.S. Attorney's Offices and the SEC have brought so many big insider cases in such a short period," Daniel Hawke, director of the Securities and Exchange Commission's Market Abuse Unit, based in Philadelphia, said in an interview. "It shows there's a high level of activity and energy and coordination."
The number of people the SEC has sued and the Justice Department has charged with insider trading has more than doubled since 2008, data compiled by Bloomberg News shows. There were 56 in 2008, 96 in 2009, 67 in 2010, 104 in 2011, and 125 this year. Of those, 22 percent were linked to trading involving health-care stocks.
People in many professions and relationships betrayed trusts to make a quick buck. Bankers, lawyers, accountants, doctors, traders, analysts, hedge-fund managers, company chiefs, pharmaceutical executives, and movie producers got into the act. Even families: The SEC sued Rex C. Steffes of Manhattan, Ill., his three sons, his brother, and his brother-in-law over illegal trading.
Manhattan U.S. Attorney Preet Bharara has been focusing on Wall Street, attacking webs of hedge funds, corporate insiders, and expert consultants. He has secured 71 convictions since October 2009.