SEC INVESTIGATING INSIDER TRADING JUST BEFORE U.S. CREDIT RATING DOWNGRADE

The Securities and Exchange Commission (SEC) is investigating whether a number of firms traded on bets that the US market would fall just before Standard & Poors dropped the AAA credit rating. S&P told the U.S. Treasure on the afternoon of August 5 that it would be downgrading but said that its policies prohibit analysts or rating committee members from trading and holding securities or options of the companies or governments they rate. It has been reported that the SEC has issued subpeonas to a number of firms focusing on trades that bet on a fall in U.S. stock. Hours before S&P cut the rating, the Dow Jones Industrial Average tumbled.