SEC: Traders may use ETFs to hide inside deals

Anonymous sources are reporting that ETFs have emerged in the SEC's investigations as a potential tool to conceal trading patterns, according to the Financial Times. In "ETF-stripping" an investor buys an ETF with a view to one particular constituent stock, and then shorts all the other securities within. The strategy allows a trader to gain exposure to the movement of one stock without ever having personally bought a share. The SEC is currently running a "spotlight" on insider trading and recently began an ongoing investigation into the activities of expert networks, charging four h...