SEC Said to Probe Insider Trading Through Exchange-Traded Funds
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The U.S. Securities and Exchange Commission is investigating whether exchange-traded funds are being used to hide insider trading, a person with knowledge of the probe said.
The funds, which usually track an index and trade like stocks, enable buyers to bet on price changes without trading futures. An investor with non-public information about a company may be able to hide illegal orders by trading in a fund that includes that stock instead of buying or selling the equity directly, the person said.