A Dow Jones report buries the lead slightly. The point is not that credit default swaps could be used in insider trading; any financial product could be used in insider trading. The point is that, thanks to the fragmented nature of the US financial regulatory system, CDS abuse could fall through the cracks.
I spoke to CFTC chairman Reuben Jeffery last month, and asked him for his views on the system of splitting regulation between the CFTC and the SEC (not to mention the Fed, the OCC and others). His response:

Historically, commodity futures and securities were very different, and so have had different regulatory paths. Now, as markets have evolved, there remain certain things we do that SEC doesn’t do, and vice versa – areas where there isn’t much overlap – but the Venn diagram of overlapping areas has grown considerably over the last several years. There is a growing phenomenon of product convergence, as they become more complex, and there question of whether it is a commodity product or a future or something in between. So there is growing suite of product areas where we and the SEC need to be in regular contact on how to consider products, given our responsibilities and the demands of the market.