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When the government utilizes wiretaps to secure evidence of a criminal conspiracy, one would think that the secrecy of the wiretap would be of the utmost concern. After all, if a suspected terrorist, mob boss, or drug kingpin knew that the government was listening in on sensitive phone conversations, it wouldn’t be long before the line went dead – or at least devoid of anything that would aid a prosecution.

At the Securities and Exchange Commission (SEC), however, this conventional wisdom is being turned on its head. At a New York City Bar Association securities litigation conference on Tuesday, the Associate Regional Director of the SEC’s New York office, David Rosenfeld, came right out and said that anyone involved in insider trading should proceed as if federal agents, regulators, and prosecutors are hearing every word they say. “You should [emphasis added] wonder if your phone is being tapped,” he said.

If the SEC viewed wiretaps only as an investigative tool, one would have to question the wisdom of Rosenfeld’s statement. But when viewed in the context of using wiretaps as a deterrent to insider trading (the SEC does not, in fact, have the power to request a wiretap; that is done by the Justice Department or other authorities who have the power to pursue criminal cases), Rosenfeld’s warning makes perfect sense. While the SEC is aggressively pursuing prosecution of market abuses, the agency’s overarching objective is the cessation of those abuse altogether.

Indeed, Rosenfeld went even further making it clear the targets the Commission has on its list. “A lot of hedge funds have been making huge returns because they were cheating,” he said – sending a very direct message that outsized hedge fund returns are no longer something to be valued, but rather something to be investigated.

Tipping the government’s hand in such a way might not be the most conventional tactic, but that doesn’t mean the SEC’s approach won’t be effective. Clearly, the agency is committed to the proposition that the most effective way to fight white collar crime is to prevent it from occurring in the first place. It’s the power of deterrence at work – and all market participants should be listening as carefully to the SEC as the SEC is listening to them.

Michael W. Robinson is Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.