U.S. Attorney To Supervise Securities Fraud Taskforce

2010 saw a renewed focus on the investigation of white-collar crime—especially securities fraud and insider trading—and just weeks ago, several Connecticut hedge funds were raided by federal agents. That focus will intensify in 2011, as a new task force on securities fraud begins its work under the supervision of the U.S. Attorney for Connecticut, David Fein. WNPR’s Harriet Jones reports.

David Fein was appointed U.S. Attorney for the district of Connecticut last July, and securities fraud was one of the very first issues he raised.

“Prior to serving as U.S. Attorney, I was a white collar defense attorney in Fairfield County Connecticut, and worked for a lot of financial institutions, and saw the extent of the investigations that were going on in the financial area, but many of them were not involving this U.S. attorney’s office.”

He says crimes in the financial services industry are a little different to other cases that his office prosecutes.

“It’s illegal for a felon to have a firearm, or it’s illegal for people to traffic in narcotics, it’s illegal to exploit children and those can be complex investigations but certainly the subject matter is not complex and it’s black and white.”

With securities fraud cases involving market manipulation or insider trading, actually discerning wrongdoing can involve many more grey areas. Fein’s office has now put together a task force that calls on the expertise of federal, state and local agencies from the SEC to the Greenwich police force.

“What we’re doing and what other prosecutors are doing as well around the country is using the traditional investigative techniques that we use in the drug trafficking, violent crime arena. Sources, informants, cooperators, electronic surveillance, computer surveillance. Tools that we’ve used repeatedly and traditionally in violent crime, gang cases, organized crime cases, but have not been as typically used in the securities fraud arena.”

And he says his office will not shy away from the type of headline-grabbing operations that saw raids at the offices of two prominent hedge funds in Stamford in November.

“Not high profile for high profile’s sake, but the players in our district are significant players. We have some of the world’s largest financial institutions right here in Connecticut in Fairfield County and so the scope of what’s involved is very significant, and the consequences are significant.”

Fein says his task force already has several investigations underway into possible insider trading violations.

For WNPR, I'm Harriet Jones.