By Phyllis Feinberg

www.HedgeFundsReview.com

There are currently 30 investigations into misconduct by hedge fund managers located in the northeast US by the US Securities & Exchange Commission, a Commission spokesman confirmed.

Some involve insider trading. Bruce Karpati, New York-based assistant regional director for the SEC's Division of Enforcement, is co-ordinating the hedge fund working group. Its main purpose, he said in an interview, "is to make sure the staff is up to speed on hedge fund issues, with insider trading being the primary focus." The group was set up about six months ago and has about 24 staff. In addition, the working group "will make sure the SEC has adequate resources to police insider trading by hedge funds," he said.

Prosecuting insider trading is a major priority of the SEC this year, including ties between the hedge funds and prime brokers, Karpati said. The SEC has brought more than 100 cases against hedge funds over the last five years, more than ever before.

"I think a lot of this is political," says Scott Meyers, head of litigation at Levenfeld, Pearlstein in Chicago. "The SEC is under pressure for not using its powers. It's a natural reaction to increased scrutiny by Congress and pressure on the SEC to do more in this area."

Meyers thinks a lot more insider trading lawsuits will be brought in the coming months. "It's politically safe to bring them," he says. "There are very few people who support insider trading. I think they will cast a wide net."