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BREAKING NEWS FROM CNBC'S KATE KELLY: SEC LOOKING AT BP TRADING BETWEEN APRIL 20 AND LATE JUNE

WHEN: Today, July 28th at 12:20PM ET

WHERE: CNBC's "The Strategy Session"

All references must be sourced to CNBC.

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DAVID FABER: I WANT TO STOP YOU THERE. I WANT TO GO TO KATE KELLY AT THE BREAKING NEWS DESK. KATE, I KNOW YOU HAVE NEWS FOR US ON ONE OF OUR FAVORITE SUBJECTS, BP.

KATE KELLY: DAVID, SORRY I'M LATE. I WAS WORKING THE PHONES. THERE WAS A LOT OF HUB BUB YESTERDAY ABOUT A VERY SHORT DISCLOSURE MADE ON PAGE 40 OF BP'S SECOND QUARTER RESULTS, WHICH SIMPLY SAID THAT THE SEC AND THE DEPARTMENT OF JUSTICE WERE INVESTIGATING SOME SECURITIES MATTERS RELATED TO THE COMPANY. THAT RAISED A LOT OF QUESTIONS YESTERDAY. AS IT TURNS OUT, THE SEC'S FOCUS, FROM WHAT I UNDERSTAND FROM PEOPLE FAMILIAR WITH THE MATTER, IS THAT THERE MAY HAVE BEEN SOME FUNKY TRADING THAT WENT ON IN BP SHARES BETWEEN APRIL 20th, WHEN THE EXPLOSION AND THE LEAK INITIALLY OCCURRED, AND LATE JUNE WHEN THEY WERE DEEPLY ENGAGED IN CLEAN-UP EFFORTS AND THERE WAS A LOT OF SPECULATION AT THE TIME ABOUT WHETHER CLEAN-UP EFFORTS LIKE THE TOP KILL, FOR INSTANCE, WERE GOING TO BE SUCCESSFUL OR NOT. THE QUESTION IS WERE THIRD PARTIES SUCH AS HEDGE FUNDS TRADING IN A WAY THAT INDICATED THEY HAD INSIDE INFORMATION ABOUT THE SUCCESS OR FAILURE OF THESE EFFORTS? THAT'S SOMETHING THE SEC IS FOCUSSING ON, ACCORDING TO ONE OF MY SOURCES. I'M GOING TO CONTINUE FOLLOWING THE STORY FOR YOU. THE HUFFINGTON POST DISCLOSED LAST WEEK THAT BROKERAGE FIRMS HAD BEEN ASKED FOR INFORMATION RELATED --

FABER: THIS IS AN INFORMAL PROBE, RIGHT?

KELLY: INFORMAL AND TO MY UNDERSTANDINGING IT WAS BP'S VOLUNTARY DECISION TO DISCLOSE THIS, BUT FOR THE INVESTMENT COMMUNITY, ANYWAY, IT ENDED UP BEING ONE OF THESE THINGS WHERE IT RAISED MORE QUESTIONS THAN IT ANSWERED. WE'RE GOING TO TRY TO ANSWER THIS FOR YOU.

FABER: OF COURSE, AND ALWAYS CONTINUES TO HAVE A CHILLING EFFECT ON HEDGE FUNDS, PERHAPS. WE SHOULD POINT OUT, FORMAL PROBE. SUBPOENA POWER, INFORMAL, THEY'RE JUST TAKING A LOOK. THANK YOU, KATE KELLY.

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