A report from the Securities and Exchange Commission's inspector general "revealed suspicious activity, appearances of improprieties and evidence of possible trading on nonpublic information and/or potential insider trading," on the part of two enforcement attorneys at the agency.

The report also said that the SEC has "essentially no compliance system in place to ensure" that its employees don't engage in insider trading. The U.S. Attorney's Washington office and the FBI are investigating the unnamed lawyers -- one man and one woman, whose identities are not public -- and the SEC is careful to point out that while it takes the matter seriously, no one has been charged with any crime yet.

Shares of American Apparel (AMEX: APP) have been poor performers since the company went public through a special-purpose acquisition vehicle, even though the company's same-store sales numbers have been incredibly impressive.

The company's shares have rebounded recently following the announcement of a major investment by Lion Capital. Now CEO Dov Charney is making his first trades in his company's stock since it went public and guess what? He's buying: 855,000 shares for $2.67 million, including 460,000 shares purchased on margin.

The Wall Street Journal reports (subscription required) that "Bank of America (NYSE: BAC) CEO Shows Confidence With Another Big Share Purchase."

It's true. Ken Lewis purchased 200,000 shares of his company's battered stock on Wednesday, the day before the stock fell to it's lowest level since 1984.

Maybe Bank of America shares are undervalued and maybe they aren't. But seriously: Why would insider buying on the part of an executive who drove the company into a ditch precisely by making bad decisions about what to buy be a good indicator? If anything, I'd be inclined to sell anything that Ken Lewis is buying.

Confidence in the financials has plunged to yet another low and you know what that means: time to try to prop up the stock and generate good PR with some insider buying!

Bank of America (NYSE: BAC) CEO Ken Lewis spent about $1.2 million to buy 200,000 shares of his company's stock and JPMorgan (NYSE: JPM) CEO Jamie Dimon spent $11.5 million on 500,000 shares of his stock.

"You have executives trying to shore up shareholder confidence,'' Harvard Business School professor Jay Lorsch told CNBC. "I would expect them to believe shareholders will interpret the purchases as a sign of long-term confidence, as investors worry about the state of the banking sector.''

What should shareholders make of it? Here's my take: It's hard to dismiss Dimon's $11.5 million investment as window dressing. Given that that company doesn't have the same questions circling its future that Bank of America does, I would say that investors should take comfort in it.

But Ken Lewis. Oh, Mr. Lewis. Lewis was paid nearly $100 million in 2007, so $1.2 million is hardly any great display of support. And even if it is: Given how wrong he was about Merrill Lynch and Countrywide Financial, why would investors interpret his buys as bullish? Mighn't he be more valuable as a contrarian indicator?

Adding to the suspiciousness is the fact that five Bank of America directors joined Lewis in buying stock during the same period. Can you say carefully orchestrated PR event?

We recently presented a look at some of the most notorious financial felons of contemporary times.

Since then, news has included the indictment of Mark Cuban for insider trading in a case that is somewhat reminiscent of Martha Stewart's case. According to the SEC, the billionaire entrepreneur asked his broker to sell all his shares of Mamma.com after the company's CEO confidentially told him of an impending stock offering that would dilute the value of all existing shares. By selling before the information became public, Cuban is said to have sidestepped losses of more than $750,000. Cuban insists, though, that no agreement existed to keep the information confidential.

And then there was the indictment in Texas of Vice President Dick Cheney, along with former U.S. Attorney General Alberto Gonzales and others. There seems to be a conflict of interest between the vice president's influence on the federal agency that oversees federal immigration detention centers and his substantial holdings in Vanguard Group, which invests in private prison companies. But does the lame-duck county district attorney, who was a no-show in court, have the authority to bring charges against federal officials with regard to federally run institutions?

This post is part of a feature in which we wonder whatever happened to some notorious financial felons. See all 17.

I sometimes get the impression that people think I'm joking when I say I love Martha Stewart. I get it; I don't look like I have much in common with Martha. My apartment is cluttered, my cleaning habits are slapdash at best, and my hair is generally unkempt. I have at least a week's worth of random garbage traveling with me in the Hyundai at all times -- and I often get the distinct impression that people from New England are looking down on me.

Despite our differences, Martha is a personal hero of mine. Flipping through her magazine, Martha Stewart Living, is not unlike paging through a National Geographic. It's a glossy, impeccably photographed glimpse into an exotic world that I can only hope one day to visit. If the July 2007 issue can be believed, Martha is the type of woman who, on a whim, jaunts out to East Hampton for a weekend of kayaking and antiquing. In between horseback rides and hikes, she just might whip up some pasta with salted pressed fish roe, or perhaps a nice avocado gelato. Can you imagine?

So you can appreciate my shock upon discovering that Martha, this creature of uncommon refinement, might also be a common white-collar criminal. On December 27, 2001, Stewart dumped 3,928 shares of ImClone Systems (NASDAQ: IMCL) through her broker, Peter Bacanovic of Merrill Lynch. Martha -- the CEO herself of an eponymous multi-million-dollar media empire, Martha Stewart Living Omnimedia (NYSE: MSO) -- raked in about $288,000 from the sale. The next day, after the market closed, ImClone announced that its cancer drug Erbitux had been rejected by the Food & Drug Administration. It was an explosive bit of news that sent ImClone shares plunging.

This post is part of a feature in which we wonder whatever happened to some notorious financial figures. See the other 17.

As Wall Street implodes around us, the word "hubris" is getting tossed around quite a bit. Hubris -- also known as excessive, overweening pride -- has become the catchall explanation for most of the market's ills. Our financial system has gone up in flames, we're told, simply because so many CEOs and regulators thought they were too smart to fail, no matter how highly leveraged their subprime mortgage portfolios may have been.

Assuming this is true, let's call Joseph Nacchio a trendsetter. As the chief executive of Qwest Communications International (NYSE: Q), Nacchio was determined to construct the world's biggest, best, and most totally awesome fiber-optic network. (Mind you, this was back in the late '90s, when the telecom bubble was just a glimmer in the market's eye.) However, the plucky CEO was driven not by a personal commitment to excellence, but rather by spite.

Nacchio left his old job at AT&T (NYSE: T) because he wasn't granted a plum promotion to president, which he felt he so richly deserved. What better way to show up his former employer than to build a superior network and steal away market share?

Unfortunately, Nacchio's impure motivations were not the best recipe for success. To give you some idea as to how his plans for world telecom domination played out, check out this blog entry I wrote about Qwest and Joseph Nacchio as part of our series on the worst S&P 500 stocks of the past 25 years.

This post is part of a feature in which we wonder whatever happened to some notorious financial felons. See all 17.

Just say it's been "a long and winding financial road" for billionaire investor George Soros -- but one that's had more smooth traveling than detours.

True, the Hungarian-born Soros was fined $2 million by a French court in 2002 for insider trading, which France's highest court upheld on an appeal on June 14, 2006, but other than that transgression, critics would be hard pressed to find other operational/financial flaws.

Soros is perhaps best known for one of the most cunning and successful short-term plays in investment fund history. On September 16, 1992 Soros sold short more than $10 billion worth of the British pound, after the Bank of England failed to raise interest rates. Soros' profit on the ensuing fall in the pound: about $1.1 billion.

Further, the other dimensions of Soros life that some critics would cite -- his social activism and philanthropy -- are viewed as positives by many others. Soros has promoted nonviolent democratization in Central and Eastern Europe, and other states, and pledged hundreds of millions of dollars to numerous universities globally and to antipoverty programs in Africa, among many other charitable acts.

This post is part of a feature in which we wonder whatever happened to some notorious financial felons. See all 17.

Ah, for the simple days of the 1980s. Way back then, the crimes of greedy traders were obvious and unambiguous, and the crooks had the decency to look the part. Few played the role of the greedy financier as well as Ivan Boesky, who went all the way from immigrant's son to millionaire investor to disgraced jailbird. I only wish our current financial crooks played their parts as well.

Ivan Frederick Boesky rose to fame and fortune taking huge positions in companies that were soon to be taken over. He was quite successful during the merger mania that drove the 1980s boom market, and by 1986 he was worth over $200 million, which was real money back before hedge funds took over the world. The only problem was that he was trading on inside information, which while enormously profitable has the distinct disadvantage of being completely illegal.

Boesky was not subtle in his approach, often buying tens of thousands of shares in a company at a premium just days before the company announced a takeover. The share price would jump and Boesky would quickly cash out. The typically somnambulant SEC eventually took notice, and Boesky was caught red-handed in 1986 and charged with stock manipulation and insider trading. He paid a fine of $100 million and spent nearly two years in the (minimum security) slammer. He also sang like a bird to the SEC, providing enough information about crooked dealings on Wall Street to almost single-handedly bring the 1980s boom to an end.

Say it ain't so, Mark Cuban.

Yesterday the Securities and Exchange Commission (SEC) charged the billionaire with insider trading. The regulatory agency claims that Cuban sold shares of mamma.com, a Canada-based Internet search company, with the advance knowledge of a yet-to-be-disclosed private equity offering of company shares.

Cuban allegedly sold his shares under the assumption that the private offering would greatly dilute his holdings. Selling as he did prevented the loss of some $750,000, the SEC claims in its charges.

He denies the charges and vows to fight.

Mamma.com changed its name to Copernic Inc. (NASDAQ: CNIC) in 2007. As a result of the highly publicized charges against Cuban, I expected to see trading volume in CNIC increase from its current average volume of 45,000 shares.

Sure enough, volume yesterday was at more than 350,000 shares. The lemmings are so predictable. They see something on the news and they place a trade.

No matter that the reasons for the company being in the news have little to do with the business, its current state or its future potential. The company is in the news because of insider trading, period.

Now, is that a reason for a stock to go up in value?

The breaking news is that the SEC is charging Mark Cuban, the owner of the Dallas Mavericks, with insider trading related to sales of shares in Mamma.com, Inc., now Copernic, Inc. (NASDAQ: CNIC). The entrepreneur billionaire allegedly dumped 600,000 shares in the Internet search engine company when he found out it was raising money by selling shares in a private offering. This information was not publicly known.

The SEC filed its complaint in the U.S. District Court for the Northern District of Texas, saying that in June, 2004, Cuban was invited to participate in the stock offering after he agreed to keep the information confidential. Knowing the offering would be conducted at a discount, Cuban then sold his entire 6% ownership within a few hours after he learned about it. When the financing was announced the next day, the company's shares dropped more than 10% due to dilution concerns. Cuban thus avoided more than $750,000 in losses.

If these allegations are true, this is a classic case of insider trading. The public had no way of knowing the stock price would drop, while Cuban and other insiders did. The SEC release didn't mention what other insiders did, but it seems, for now at least, that only Cuban acted on the information.

I've had about all the news of corruption I can take. Of course, I don't mean to sound accusatory, or find Mark Cuban guilty before he has been properly tried, but it's just the timing of it. When the world is swirling into a global recession based on greed, and probably at least a little bit of corruption, these news items are definitely ones I can do without.

With its stock price in the toilet, Lear (NYSE: LEA) Chairman and CEO Robert Rossiter bought about $400,000 worth of stock.

That, and the fact that The Wall Street Journal picked up (subscription required) the story was enough to drive the stock up nearly 25% today on no other news. But here's a newsflash: the PR value of the purchase far exceeds the actual value of the investment -- $400,000 worth of insider buying drove the company's market cap up more than $20 million. Other insiders have since followed suit and purchased token amounts of stock: the CFO and the president of global seating systems,

Making me even more skeptical of the situation, Rossiter told the Journal that "The stock is so undervalued, it's unbelievable."

Rossiter is milking this transaction for all the positive publicity he can get -- something that Lear has been sorely lacking for a long time.

Orchestrated insider buying accompanied by media interviews makes me skeptical, and investors are better off focusing on the real story: even after these high profile buys, Mr. Rossiter still owns well under 1% of the company's stock. That's hardly a vote of confidence.

The insiders are buying stock again. Barron's reports (subscription required) that "Four weeks ago, the ratio of insider buyers to sellers was nearly even, according to InsiderScore. In the week ended Oct. 14, however, buyers trumped sellers by three to one, with much of the buying concentrated in shares of smaller companies. Insider buying was strong in shares of small regional banks and energy-exploration and pipeline concerns."

But before you get too excited and declare the beginning of a bull run, think about it: with stocks in the toilet, a lot of investors aren't exactly thrilled with the executives they're paying millions each year to create value. For a CEO on the hot seat, some token insider buying can stave off criticism -- but it's more about survival than bullishness.

Looking at the number of insider buys vs. sells can be misleading: executives are unlikely to sell a few shares because it sends such a bad message -- but buying just a handful of stock -- a few paychecks' worth -- can send a powerful message to a market dying for a reason to be optimistic.

Before you get interested in a stock based on insider buying, make sure it's material. Watching a CEO who was paid $15 million last year pour $100 thousand into his company's stock that's down 60% isn't exactly a great omen. And be extremely skeptical of situations where the CEO, CFO, and directors all buy stock at the same time -- it's a pretty transparent publicity stunt.

Oracle (NASDAQ: ORCL - option chain) shares are dropping along with much of the overall market. Today the company announced it would acquire Advanced Visual Technology, but what I am looking at is the recent insider activity on ORCL, which indicates that one of the company's president's, Safra Catz, exercised 500K of stock options and almost immediately sold the stock for about $10 million about two weeks ago at a price near $20 per share.

Oracle has tumbled over the past month or so, and if those in the know are still selling at $3 less than recent August prices, then that is ringing some alarm bells for me. Granted, insider activity is not a perfect indicator, since he might have had needed cash for some reason, but if Ms. Catz thought the stock would be rising in the next few weeks, then she probably would have waited to sell, right? If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ORCL.

This morning, ORCL opened at $20.19. So far today the stock has hit a low of $19.55 and a high of $20.19. As of 12:15, ORCL is trading at $19.78, down $0.53 (-2.6%). The chart for ORCL looks bearish and S&P gives ORCL a very positive 5 STARS (out of 5) strong buy ranking.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $21 range.

Shares of Apple, Inc. (NASDAQ: AAPL) were affected not to long ago by reports that founder, chairman and CEO Steve Jobs is cancer-free. Of course, that's good news for Apple shareholders but it got me to thinking -- just as a hypothetical matter -- is Mr. Jobs' medical status nonpublic information?

Suppose that his doctor had conducted an examination and found Mr. Jobs to be in tip-top shape -- if he goes out and buys call options before the news reaches the media, is that insider trading? I'm not sure. It seems unethical on a multitude of levels, but it isn't related to the company in a direct, material way like news about an upcoming merger would be. Just to be clear: I'm speaking hypothetically and have no reason to believe anything like this happened.

Similarly, could the SEC go after a doctor who, after determining that a legendary CEO had six months to live, bought put options set to expire on the approximate day of the CEO's death? I know this is morbid, but the law appears to be ambiguous on this matter.