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US stock exchanges agree to centralize insider trading regulation

[JURIST] The US Securities and Exchange Commission (SEC) announced [press release] on Wednesday that it has reached a tentative agreement [PDF text] with ten US stock exchanges to centralize insider trading controls among the institutions. Under the plan, the programs to prevent and detect insider trading will be centrally controlled by the Financial Industry Regulatory Authority (FINRA) and a section of the New York Stock Exchange (NYSE) [corporate websites], instead of having each exchange run its own program. Under the Securities Exchange Act of 1934 [text], the markets are required to institute self-regulating controls, and the SEC has said the plan should make those controls more effective. In a press release [text], FINRA Senior Executive Vice President Stephen Luparello praised the plan:

While U.S. equity markets have always coordinated very well with each other to detect and investigate insider trading, this agreement takes insider trading surveillance to a new level because it consolidates within FINRA and NYSE Regulation what used to be 11 discreet programs at each market center... As a result, potential insider traders, whether acting alone or in concert with others, and regardless of where they trade in the U.S., will be more readily identified in this new, more unified structure.
The SEC will vote on whether to officially sign off on the plan after a period reserved for public comment. AFP has more.

Qwest Communications [corporate website] released its second quarter earnings report [press release; materials] this week, announcing an agreement [JURIST report] to pay an additional $40 million to settle a class action shareholder lawsuit resulting from an insider trading scandal [JURIST report]. Earlier this month, the US Court of Appeals for the First Circuit [official website] affirmed [opinion text; JURIST report] the dismissal of a shareholder securities suit against Biogen Idec [corporate website], in which the class of plaintiffs accused directors of violating the Securities Exchange Act by intentionally misrepresenting the safety of its multiple-sclerosis drug, Tysabri [informational website], in order to sell their shares at high prices.

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