Memo to securities regulators:

To those looking into whether hedge funds are using inside knowledge, let me save you some time. They are. Does anyone really think that if a trader at a large hedge fund happened upon some juicy insider information that could help him make a 7-figure bonus, that he'd just let it drop? One of the primary things that makes someone a good trader is aggressiveness. Kill or be killed. The riskier the trading, the more aggressive a successful trader is. That kind of attitude tends to lead to walking very close to the line, and sometimes stepping over.

The Wall Street Journal article from today titled "Are Deal Makers on Wall Street Leaking Secrets?" specifically references trading in CDS before the recent LBO offer for HCA. The thing of it is that HCA being an LBO candidate wasn't exactly a big secret. In fact, the Wall Street Journal reported on July 19 that an LBO attempt for the company had collapsed, 3-days before a successful deal was announced. I will tell you that it was all over the street for weeks that HCA was a buyout candidate.

I'm not saying there was not insider trading going on, because see paragraph #1. But in this case, I'm not sure this wasn't just old fashioned good analysis.