Hint: One’s run by a hot-dog enthusiast and starts with a “P” and ends with an “oint72.”
The SEC has evidence of more than 20 phone calls, emails and instant messages among investors and analysts at Height Securities between the time the firm sent the email alert and when markets closed.
The communications involved at least four hedge funds: SAC Capital Advisors (now called Point72 Asset Management LP), Viking Global Investors LP, Visium Asset Management LLC and Citadel LLC.
Steve and Ken and Andreas and whoever it is that runs Visium are apparently among the 150 or so firms on the receiving end of a little e-mail from Height last year about the cancellation of funding cuts for private insurance plans. You know, the kind of thing that might make health-insurance stocks, like, let’s say, Humana, go up.
Well, it seems that the folks at Height may or may not have gotten a “head’s up” about it from a former employee-cum-lobbyist, who may or may not have heard about it from a top Congressional staffer, who should probably not have been running his mouth, if he was, which we don’t know, because the SEC and Congress are embroiled in a jurisdictional pissing contest over whether he has to run his mouth off to an SEC investigator now. But while that wends its way through the third branch of government, the SEC figured it would take a look at whether the alleged tip actually produced any alleged insider trading.
There is nothing inherently illegal about investors talking with individuals at Height Securities about its research note. In fact, it would be normal for them to do so before making a large trade based on such a note. But investors could be liable for violating insider-trading rules if they knew the information was obtained illegally—or if they should have known that the information was obtained illegally. As a result, the information relayed in the communications between Height and the hedge funds is critical.