Richard Ketchum, the chief executive of the Financial Industry Regulatory Authority, or FINRA, tells Reuters’ Joseph Giannone that he sees “no higher priority” than ensuring market integrity by working against insider trading and says safeguards against another “flash crash” will limit extreme volatility. We have a story about it at HedgeWorld.com.

“I think the steps that have been taken, with the help of the SEC and CFTC, provide a better environment with the existence of single stock circuit breakers, with identifying restrictions and a variety of things that really created too much risk before,” Ketchum says. “We’re not in a perfect place from a market standpoint. Electronic markets are different. We’re all going to have to learn how to regulate with them. But I think investors should feel much better about the risk of extreme volatility than they did a year ago.” (more…)

Reuters Breakingviews columnist Reynolds Holding tells Insider’s Rhonda Schaffler that lawmakers need to clarify words like “material” and “duty” when it comes to insider trading cases – something the Raj Rajaratnam/Galleon Group trial didn’t accomplish.

“All the law in insider trading generally is court made, case by case made,” Holding said. “And courts at different times come up with different definitions and at different times come up with different conclusions about what’s illegal. So I think it would be very helpful for Congress to say look, here’s the line. Otherwise you’ve got people out there who are trying to do their jobs, essentially – I mean, a lot of people know they’re doing wrong, but there are those people who aren’t sure where the line is.” (more…)

Former Securities and Exchange Commission chairman David Ruder tells Reuters Insider that federal prosecutors’ extensive use of wiretaps during the Raj Rajaratnam insider trading trial had “a great influence” on the jury and set a precedent for future cases. Rajaratnam was convicted on Wednesday on nine counts of securities fraud and five counts of conspiracy to commit securities fraud. The convictions came after a two-month trial, and 12 days of jury deliberations. Rajaratnam will remain free on a $100 million bond until his sentencing July 29. (more…)

The trading scandal surrounding ex-Berkshire executive David Sokol is a sign Berkshire has grown too large for Warren Buffett to manage without compliance procedures, says author and RAM Partners founder Jeff Matthews. “And that one guy with 21 people in the home office can’t handle the doings of 260,000 people around the world, and maybe they’re going to have to implement some of the kinds of things that Buffett really doesn’t like,” Matthews said. (more…)

The expert networks that institutional investors and hedge funds have come to rely on for a trading edge may have tested the limits of what constitutes insider information, says Westlaw’s Ely Razin.

Click on the image to be taken to the Insider video.

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The U.S. Attorney for the Southern District of New York this morning announced the first arrest in connection with a wide-rainging investigation of insider trading networks among research firms, hedge funds, mutual funds and other investment advisers. Don Ching Trang Chu, an executive at what prosecutors described as an “expert networking” firm, was arrested Wednesday morning and charged with conspiracy. The U.S. Attorney’s Office for the Southern District of New York and the FBI jointly charged that Chu “arranged for insiders at publicly traded companies to provide material, nonpublic information to [his] firm’s hedge fund clients for the purpose of executing profitable securities transactions.”

Read the news release from the U.S. Attorney’s office here: http://www.justice.gov/usao/nys/pressreleases/November10/chudonarrestpr.pdf.

Here’s the latest on HedgeWorld: http://www.hedgeworld.com/news/read_news.cgi?section=dail&story=dail17770.html