U.S. securities regulators have about 150 active hedge fund investigations and more than a dozen current probes involving credit default swaps, Securities and Exchange Commission Chairman Mary Schapiro said on Monday. The SEC also has about two dozen active municipal securities investigations, possibly involving arbitrage-driven fraud, public corruption and price transparency, Schapiro told a conference of business journalists in Denver.
Schapiro, who has made enforcement one of her top priorities since taking the helm late in January, said the hedge fund investigations include possible Ponzi schemes, where early investors are paid with money from newer investors, misappropriations and performance smoothing.
Last year, the SEC ordered more than two dozen hedge funds, broker-dealers and big investors to hand over information about their trading in the securities of certain financial institutions such as American International Group [AIG 1.40 -0.06 (-4.11%) ] and Lehman Brothers.
The order came as U.S. markets were in a tailspin and financial services executives, investors and lawmakers feared market rumors would destroy Wall Street.
The SEC took steps to crack down on market manipulation and rumor mongering and the agency said investors with significant trading activity in financial firms or positions in credit default swaps would be required to disclose those positions to the SEC.
Schapiro did not provide further details on the credit default swap investigations. Schapiro hired former federal prosecutor Robert Khuzami to lead her agency's enforcement division, which has been criticized by lawmakers for having missed opportunities to stop Bernard Madoff's massive investment fraud.
She has embarked on an ambitious agenda to give shareholders an easier and cheaper way to nominate board directors and is looking at better disclosure for municipal securities, among other things.
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