Former SEC Chairman Harvey Pitt, a go-to person for "talking points" on the fed's multi-pronged investigation into insider trading, said he expects the regulators to focus on and file only clear cases of abuse.  And, according to a news report this past Saturday, prosecutors and securities regulators are likely to file a number of cases, rather than a single large case, aimed squarely at the $1.7 trillion hedge-fund industry. 

“There are deals that are now coming into play, that have been coming into play before the crash and so on, and the market activity suggests that there has been unlawful trading activity.  And I think this is an effort by the regulators to show that they’re on top of the issue, and they’re going after anyone who engages in that conduct.”

Mr. Pitt believes the regulators will on prosecuting any insider trading cases that lie in the “gray area,” because they'd likely lose their cases against the firms.  He also said it's significant that regulators have joined forces to pursue the cases.

Mr. Pitt made this distinction between “inside” information used by investors versus that used by a member of the press:

“If what you’re getting is available through due diligence and intelligence, it’s usable.  If what you’re getting that reflects somebody parting with a secret that was supposed to be kept confidential, you have obligations not to divulge that - although you can report it in the press.”

[CNBC.com, 11/22]