In May, the SEC froze brokerage accounts owned by Hong Kong couple Kan King Wong and Charlotte Ka On Wong, accusing them of turning an $8 million profit on Dow Jones & Co shares after allegedly hearing about News Corp's $5 billion offer for the group.

Four months on, the SEC still has not proved that the couple traded on inside information. Onlookers say this underlines how fast the SEC is bringing lawsuits against international investors, and how tough it is for the agency to back up the charges with concrete evidence.

"There's immense damage to their credibility if they misfire'' and lose a prominent case they bring too hastily, James Cox, a securities-fraud expert at the Duke University School of Law in Durham, North Carolina, told Bloomberg News.

Unless the SEC can eventually connect the dots, a judge will dismiss these cases, Cox says, which would undermine the deterrent effect for other would-be illegal traders.

Bloomberg News points out there's a lot at stake: If the top U.S. securities regulators can't demonstrate they have global reach, their authority may be undercut. In the meantime, international investing continues to grow fast.
The Federal Reserve says the share of U.S. equities owned by overseas investors has doubled to 21 percent since the end of 2001.

In May, the SEC brought insider-trading charges against Hafiz Naseem, a Pakistani-born investment banker who worked for Credit Suisse in New York. Prior to his arrest, agents had already pressed charges against a financier in Pakistan and other overseas bankers who allegedly traded on inside information provided by Naseem.

Since January, the SEC has named people from Canada, Switzerland, the U.K., Brazil, Taiwan and Pakistan, and Hong Kong, in insider-trading lawsuits.

For cases targeting people within the U.S., the SEC has recently waited an average of two years before filing suit, after noticing suspicious trades. This gives the regulator time to interview participants and collect evidence.

But with international cases, the SEC has to act faster or risk failing to recover illicit funds which could be moved offshore.

Regulators have increasingly been using technology such as complex event processing, paired with traditional investigative techniques to try and catch illegal trades.

Complex event processing technology streams large amounts of data in real time from disparate sources and analyzes it, detecting patterns and flagging for example suspicious trading ahead of public announcements.

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