SEC To Probe Use Of ETFs For Insider Trading

Law360, New York (February 10, 2011, 2:39 PM EST) -- The U.S. Securities and Exchange Commission has reportedly launched an investigation into whether Wall Street traders are exploiting exchange-traded funds to hide insider trading.

ETFs have emerged as a possible means to maximize gains in single stock while disguising larger trading patterns, prompting concerns from regulators, the Financial Times reported Thursday.

The agency is also looking into whether traders are using swaps to camouflage insider trading patterns, according to the Financial Times.

An SEC spokesman would neither confirm nor deny the investigation Thursday.

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