SEC demands records from hedge funds

Sep 25, 2008 @ 11:38 am

By Andrew Coen

The Securities and Exchange Commission has ordered more than two dozen hedge funds to turn over trading records and e-mail communications made between Sept. 1-19, The Wall Street Journal reported today.

The object is to determine whether traders spread rumors to manipulate shares.

The Sept. 22 order identified six financial services companies may have been victimized by stock manipulation by the hedge funds: New York-based American International Group Inc., Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Morgan Stanley and Merrill Lynch & Co. Inc., along with Seattle-based Washington Mutual Inc., according to the Journal.

The investigation into these hedge funds is part of the SECís broader effort to crack down on financial firms spreading false rumors and conducting abusive short selling practices.

An SEC spokesman had no comment on the Journal story.

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