As if the options back-dating scandal, which involves over 100 companies, was not enough, there is an emerging investigation into the use of inside information at America’s top investment banks.
According to Fortune, the SEC is "likely to scour trading records to see if the brokers are using info about clients’ moves to invest their own capital". Last year, the top five investment banks (Morgan Stanley, Goldman, Merrill, Lehman, and Bear Stearns) earned $61 billion from proprietary trading. The success of the big banks leaves observers wondering how they investment decisions could be so "lucky".
If these firms, and others, are using client investment information to drive their own successful trading, the options back-dating scandal could have quite a bit of competition for the SEC’s time.
Douglas A. McIntyre
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