Market Overview

SEC Probing Hedge Fund Trades (WFC)


The Wall Street Journal has reported that the U.S. Securities and Exchange Commission (SEC) is probing two hedge funds in regards to their trading activities.

The SEC is reviewing trades made by the $13 billion Appaloosa hedge fund around the time that Wells Fargo & Company (NYSE: WFC) agreed to purchase Wachovia Corp in 2008.

The SEC is also said to be looking into trades made by the $4.9 billion Carlson hedge fund.

The probe revolves around four secondary stock offerings that were made between 2007 and 2009.

The Carlson probe is related to Rule 105, which forbids short sellers from covering short sales with offering securities bought from an underwriter or broker five days prior to pricing of the securities.

The Wall Street Journal cited sources familiar with the probes who could not be named.

Both hedge funds are said to be cooperating with the probes.


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