If the insider trading clairvoyants look into their crystal balls and see Brazil as our future, we're in trouble.

Brazil, which this year has had about one merger or acquisition deal announced per day, finds suspicious trading ahead of nearly every one of them. But according to a lengthy Bloomberg article today on the country's widespread insider trading woes, not a single person has been put behind bars since Brazil made insider trading illegal in 2001. In the past three years, ten people have been "punished" with using information illegally to trade, but most cases get dropped for lack of proof.

Marcelo Trindade, Brazil's top securities cop, told Bloomberg that there has been a jump in share price, increased options trading activity, or leaks in newspaper articles before nearly all of the 145 deals this year. When regulators investigated the 56 percent jump in shares of the refinery Ipiranga just before it was acquired, they discovered that at least 400 lawyers, consultants, auditors, bankers, and executives had access to insider information before the announcement.

Here on our own turf, of course, we've got something of a mini-Brazil on our hands. The M&A boom has brought with it endless opportunities for making a quick, albeit illegal buck. The regulators are investigating suspicious trading in stock or options of Hilton Hotels, Dow Jones, Bausch & Lomb, and ABN Amro, to name just a few from recent weeks. It's almost becoming cliche that the second-day stories of a major takeover include references to increased options trading in the days prior to its announcement.

And how do our securities cops stack up next to Brazil's? In the past year, the S.E.C. has filed insider trading-related suits against more than twelve investment bankers, analysts, and executives, according to Bloomberg. It's filed another dozen complaints against brokers and traders.

While the S.E.C. likes to point out that that's a higher number of insider trading-related cases than it filed during the entire decade of the 1990s, it's not exactly something to brag about.

In May, the agency trumpeted back-to-back busts of insider traders --one against a former Morgan Stanley employee and her husband for reaping $600,000 in illegal profits, and the other against the husband of Oracle C.E.O. Larry Ellison's assistant for trading shares of the company's acquisition targets.

That's all well and good, but when the number of call options on Hilton Hotels on the day before Blackstone announced its deal is eight times their normal level, snooping on pillow talk isn't going to get us anywhere.

Meanwhile, the sources of that Hilton inside information could be sipping a cocktail on a plane to Rio.

by Megan Barnett