Tip on Medicare Prompts Insider Trading Investigation

With only 20 minutes remaining in the trading day, a Washington-based broker-dealer, Height Securities, blasted out a “flash report” to nearly 200 clients, including some of the biggest hedge funds on Wall Street, predicting that Medicare was about to raise some reimbursement rates. Within minutes, dozens of investment houses bought the stocks of various health insurance companies, including Humana, sending them soaring ahead of the official announcement from Medicare at around 4:15 that afternoon. That was 19 months ago. Today, the email from Height Securities is at the center of a broad investigation into possible insider trading that stretches from within the walls of the Centers for Medicare and Medicaid Services to the halls of Congress and onto the sleek trading floors of Wall Street hedge funds. The issue: Did employees inside Medicare as well as congressional staff members pass along nonpublic information that wound up in the hands of investment firms that used it to make a profit? To some, the investigations are an extension of the crackdown on hedge funds and their expert-network information suppliers, which has led to dozens of convictions on Wall Street in recent years.

Source/more: New York Times

David Wingate is an Elder Law Attorney representing clients in Frederick and Montgomery Counties, Maryland.