Another High Profile SEC Trial Loss – More Steps Backward

The SEC continues to struggle with its swagger. The claim that it has returned is, at best, debatable. Clearly prevailing in the SEC v. Wyly, 10 Civ. 5760 (S.D.N.Y. Verdict May 12, 2014) earlier this month was a major and much need courtroom win for an agency. Yet on the same day the Commission lost...

Athletes, Celebrities and Insider Trading Investigations

The news over the weekend that Phil Mickelson is subject of an insider trading investigation is surprising and not surprising at the same time. Celebrities and high profile athletes will naturally attract a lot of investigator attention when their names show up on lists of suspect trades. Imagine you...

Another Week, Another Insider Trading Trial Loss For the SEC

On Friday, May 30 th a Manhattan jury returned a verdict against the SEC in the long-running and high profile insider trading case, SEC v. Obus. One week later on Friday, June 6, 2014 a jury on the other side of the country sitting in Los Angeles returned a verdict against the SEC in an insider trading...

SEC Files Serial Insider Trading Action

The Commission brought an insider trading action centered on repeated trades in the same shares over a 40 month period. SEC v. Khan, Civil Action No 14-cv-2743 (N. D. Cal. Filed June 13, 2014). The defendants are Saleem Khan, Ammar Akbari, Roshanlal Chaganlal and Ranjan Mendonsa. Mr. Khan has held...

Equity Options and Insider Trading

I am shocked! Shocked that there is insider trading in advance of merger announcements! OK, so I'm not. But, what is surprising is just how much of that insider trading happens via equity options. Seriously. I know you can make a lot of money in equity options, but you're also going to get caught...

Dark Pools, High Speed Trading and the NY AG’s Suit Against Barclays

The New York Attorney General’s insider trading 2.0 investigation is apparently expanding. Initially the investigation concerned the limits of insider trading, pushing the issue into questions more akin to fairness and a parity of information The investigation focused, for example, on questions...

The SEC, Insider Trading, Golf and E-Mails

Insider trading is generally a profit making venture. But not always as a group of golf friends recently learned – and documented in numerous e-mails that may have actually created a better evidentiary trail than the much discussed Galleon wire-tap tapes. SEC v. McPhail, Civil Action No. 1:14-cv...

Former Qualcomm EVP Pleads Guilty to Insider Trading

For former Qualcomm Inc. Executive Vice President Jing Wang the cover-up not only failed but increased his liability. The former executive pleaded guilty this week to securities fraud based on his insider trading, money laundering tied to his efforts to evade detection and admitted to obstruction. U...

Investor Relations Executive Settles SEC Insider Trading Charges

The SEC filed a settled insider trading case against a partner in an investor relations firm who traded securities based on information he obtained from draft press releases he worked on for firm clients. The settled action alleges that the executive was a “temporary” insider and breached...

Third Circuit Rejects Claim That Fiduciary Duty Required For Insider Trading

Insider trading cases frequently turn on the nature of the relationship between the trader and the person who is the source of information. The breach of that relationship of trust and confidence can supply the statutory element of deception, the predicate for a violation of Exchange Act Section 10(b...

SEC Brings Another Insider Trading Case Tied to Golf

Golf is becoming a recurring theme in insider trading cases. Last month the SEC brought an insider trading action against a group of golf friends. That action, detailed here, was supported by a series of e-mails among the group which documented their scheme. Now the SEC has brought another insider trading...

SEC – USAO Charge Investor Relations Executive With Insider Trading

The SEC may be developing theme based insider trading cases. In recent weeks the agency brought two insider trading actions centered on golfing friends. SEC v. O’Neill, Civil Action No. 1:14-cv-13381 (D. Mass. Filed August 18, 2014); SEC v. McPhail, Civil Action No. 1:14-cv-12985 (D. Mass. Filed...

The SEC in the Office Fails to Deter Insider Trader

The theory of “broken windows,” the enforcement approach being pursued by the SEC, is that prosecuting all violations large and small creates deterrence. That comes from a kind of omnipresence, or a cop on the beat impact. In the SEC’s case of course there is no beat or cop so it is...

SEC-USAO Halt Insider Trading Ring

Separating the source of the inside information from the trader with a buffer was supposed to shield everyone from the watchful eye of enforcement officials. If there were questions, research reports would be produced to support the purchase. This was the theory of three friends who used inside information...

Wells Fargo Admits Violating Law, Pays SEC $5 Million Penalty

Wells Fargo was named by the Commission in a proceeding for failing to establish, maintain and enforce policies and procedures to prevent the misuse of inside information. The firm added to its difficulties during the investigation by failing to timely produce records regarding an instance of insider...

SEC Charges Wells Fargo Analyst, Trader With Insider Trading

Analysts reports frequently move the market and are thus considered inside information prior to publication. That is the predicate for an SEC administrative proceeding which charges a Wells Fargo analyst and trader with insider trading. In the Matter of George T. Bolan, Jr., Adm. Proc. File No. 3-16178...

SEC Insider Trading Cases as Administrative Proceedings – A New Trend?

Traditionally, the SEC has brought insider trading cases as civil injunctive actions. The recent emphasis on administrative proceedings, however, appears to be changing that. Earlier this week the agency brought an insider trading cases as an administrative proceeding against a Wells Fargo Analyst and...

The Second Time Around Analyst Is Charged With Insider Trading

The second time around proved to be the undoing of a senior financial analyst at a pharmaceutical company identified only as Pharma Co. Two years ago he supposedly furnished material non-public information about a proposed take-over to his longtime friend, identified as Trader. Trader traded and profited...

Wells Fargo Compliance Officer Charged With Altering Document

The acquisition of Burger King by 3G Capital Partners is the matter that just keeps on giving – at least for SEC enforcement. Initially, the Commission brought an action against Wells Fargo broker Waldyr Da Silva Prado Neto, who misappropriated inside information about the transaction from a client...

SEC – USAO Charge Trader In Analyst Insider Trading Case

Earlier this month the SEC brought an insider trading case against Zachary Zwerko, a financial analyst at a pharmaceutical company identified only as Pharma Co. SEC v. Zwerko, Civil Action No. CV 8181 (S.D.N.Y. Filed Oct. 10, 2014). The Manhattan U.S. Attorney’s Office brought parallel criminal...

The SEC’s Carter’s, Inc. Investigation Yields Another Insider Trading Case

Carter’s, Inc. is the investigation that just keeps on generating cases. The investigation has yielded seven SEC actions charging insider trading and financial fraud. Hedge fund manager Stephen Slawson became the eight person charged in the investigation. SEC v. Slawson, Civil Action No. 1:14-cv...

SEC Files Another Insider Trading Case as an Administrative Action

The SEC continued what appears to be a growing trend of bringing insider trading cases as administrative proceedings. Since the beginning of September the Commission has filed at least four insider trading actions as administrative actions rather that civil injunctive cases ( here ). The list now extends...

SEC Files Settled Insider Trading Case in District Court

After bringing a series of insider trading cases as administrative proceedings in recent weeks, the Commission returned to its more traditional approach. The agency filed settled insider trading charges against a CEO and restaurant manager in federal district court. SEC v. Redmond, Civil Action No. 23138...

SEC Settles Insider Trading Case With COO

The SEC and the DOJ have waged an aggressive battle against insider trading for years, resulting in a string of courtroom victories, guilty pleas and settlements as well as significant sanctions which are supposed to deter future wrongful conduct. Nevertheless, corporate executives keep trading on inside...

The Second Circuit Defines Tippee Liability and the Personal Benefit Test

Todd Newman and Anthony Chiassons, remote tippees, three to four steps removed from the source of the inside information about pending earnings announcements for Dell, Inc. and NVIDIA, were convicted of insider trading. In reviewing their convictions for insider trading, the Second Circuit stated: “...