Insider Trading Probe On US Banks To Be Conducted By Government Official (C, BAC)

According to the Financial Times, there have been charges that US Bank executives have been involved in insider trading, which are to be examined by Neil Barofsky, the US government’s financial rescue efforts special inspector-general.

While the largest banks like Citigroup Inc. (NYSE: C) and Bank of America (NYSE: BAC) got financial assistance under the TARP, Mr. Barofsky will be investigating whether classified info was channeled into trading rooms for insider trading purposes.

“We have pending investigations looking into that – typically into insider trading,” Mr. Barofsky said. “Once upon a time getting Tarp funds actually meant your stock price would go up and we are looking at specific trading around Tarp announcements by insiders or looking at potential tips from insiders.” “Part of the problem is, when the Tarp funds were extended . . . although there was this public disclosure that the purpose of these programs was to increase lending, very little, if anything, was done to encourage or direct lending,” said Mr Barofsky.