[ by Larry Goldfarb ]

Did former Treasury Secretary Henry Paulson in 2008 suggest during  a "lunch roundtable with hedge fund and private equity firm managers" on July 21, 2008, at the New York offices of Eton Park Capital Management LP,  that the government was willing to bail out struggling mortgage-finance companies Fannie Mae and Freddie Mac?

The U.S. Securities and Exchange Commission (SEC) is probing possible insider trading activities by Wall Street professionals who were present in that private meeting with Henry Paulson in 2008, the Wall Street Journal reported, citing people familiar with the investigation. The SEC is trying to find out if Paulson in fact suggested in the meeting that the government was willing to bail out struggling mortgage-finance companies the WSJ said.  Subsequently, the federal government took over Fannie and Freddie amid heavy losses less than two months after the meeting.

SEC recently sent subpoenas to parties who were present at the July 2008 meeting, the Journal said adding that Paulson hasn't been handed one.  Parties present at the meeting included Taconic Capital Advisors, GSO Capital Partners, now part of Blackstone Group LP, Lone Pine Capital LLC, Och-Ziff Capital Management Group LLC and TPG-Axon Management LP, WSJ said.

Taconic confirmed the receipt of a subpoena and declined any wrongdoing, the Journal said.

A Blackstone statement affirmed that the company doesn't believe that any 'market sensitive information' was discussed in the said meeting and added that it didn't take any position on the mortgage firms, the WSJ said.

For further details, go to:  [ Reuters, 9/14/12 ].