Insider-trading probe goes into legal gray area

Associated Press

NEW YORK

The aggressive push federal prosecutors are making against potential insider trading is sending investigators into a legal gray area that may redefine insider trading itself.

Mutual-fund company Janus Capital Group said Tuesday it was cooperating with an inquiry on insider trading. A day earlier, the FBI searched the offices of three hedge funds in New York, Connecticut and Massachusetts as part of what experts say could be one of the largest probes in Wall Street history.

Investigators are thought to be pursuing suspicions of trading by hedge funds and mutual funds that might have profited illegally using inside information.

But the behavior being targeted by investigations appears more elusive and complex than the common understanding of insider trading — high-powered executives picking up the phone, whispering secret tips about big deals, and trading stock at an unfair advantage.