The federal government is "putting the finishing touches" on an exhaustive three-year investigation into insider-trading, that's largely focused on consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation.  The WSJournal apparently broke the story over the weekend, providing an excellent account of the criminal and civil probes that authorities say could eclipse the impact on the financial industry of any previous such investigation.  Some charges could be brought before year-end. 

    One focus of the criminal investigation is the possible  pipeline of 'nonpublic information' that runs from independent analysts or consultants who work for companies, to hedge funds and mutual funds.  These individuals provide "expert network" services to traders seeking an investing edge.  Primary Global Research LLC, of Mountain View, CA, is one such expert network.  Its expert consultants connect with investors seeking information in the technology, health-care and other industries.  Primary's CEO and COO previously worked at Intel Corp.

    Another aspect of the investigation involves Goldman Sachs Group, whose bankers are suspected by some of leakeinginformation about transactions, including health-care mergers, in ways that benefited certain investors.

    Independent analysts and research boutiques also are being examined - such as John Kinnucan, a principal at Broadband Research LLC in Portland, OR, who sent an email on 10/26 to about 20 hedge-fund and mutual-fund clients telling of a visit by the FBI.  Mr. Kinnucan confirmed writing the email, that went to traders at hedge fund SAC Capital Advisors and Citadel Asset Mgmt, mutual-fund firms Janus Capital, Wellington Management and MFS Investment Management, among others.  Here's a snippet of the email:

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information."   "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.)  We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

    Another aspect of the probe is an examination of traders at hedge funds and trading firms - including First New York Securities LLC - to determine whether they improperly gained nonpublic information about pending health-care, technology and other merger deals.  Some traders at First New York, a 250-person trading firm, reportedly profited by anticipating health-care and other mergers unveiled in 2009.

For the complete story, click onto:   [The WSJournal, 'Vast Insider Trading Probe, 11/20]