Reuters- The U.S. Securities and Exchange Commission, which recently stepped up probes of hedge funds, is looking at whether banks and others are investing in hedge funds to share inside information,an SEC official and securities lawyers said on Wednesday.
The probes are based on concerns that public company investors such as banks or others may invest in hedge funds to gain access to their strategies which may move stock prices, lawyers who are familiar with the probes said.
“The SEC is concerned that there is an underground flow of inside information,” said Paul Roth, partner in Schulte Roth & Zabel, a New York law firm with a large roster of hedge fund clients. But he said he does not believe such practices are widespread.
