Insider-Trading

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Last week, the U.S. Securities and Exchange Commission brought five insider-trading cases against a slew of individuals. The U.S. Attorney’s Office for the Southern District of New York also announced parallel criminal charges against the defendants in four of the five cases. These cases contain examples of the classical theory and the misappropriation theory of insider trading.

These cases were the result of close coordination with the SDNY and SEC, and they appear to be the result of an enforcement sweep. Increasingly sophisticated data analytics and market surveillance make it highly likely that those who wish to exploit material nonpublic information will be caught, with severe consequences, including disgorgement, criminal restitution, civil penalties, and incarceration.Continue Reading SEC and DOJ Go On An Insider-Trading Enforcement Spree

Corporate officers and directors sometimes view having a Rule 10b5-1 trading plan as an impenetrable barrier to facing insider-trading charges.  But a recent case announced by the SEC demonstrates that such plans are not bulletproof.[1]  If an executive enters into such a plan while in possession of material nonpublic information, insider-trading charges could ensue.
Continue Reading SEC Charges Public Company Executives with Insider Trading Despite Trading Through Purported Rule 10b5-1 Trading Plans

On December 20, 2021, the SEC[1] and DOJ[2] each announced fraud charges against five Russian nationals. The five defendants are charged with a multiyear scheme of hacking into service providers that help public companies make quarterly and annual filings with the SEC through the EDGAR filing system.  By hacking the service providers, the defendants allegedly obtained material nonpublic information (MNPI) regarding earnings releases before those releases were made public.  The defendants then allegedly traded ahead of the release of the MNPI, reaping profits of some $82 million in the process.
Continue Reading SEC and DOJ Bring Parallel Civil and Criminal Charges Against Five Russians for $82 Million Hack-And-Trade Scheme

Today the SEC [1] and the DOJ [2] announced civil and criminal charges involving an alleged brazen $8 million insider-trading scheme.   The trader, Dayakar Mallu, allegedly traded ahead of four public announcements by his former employer, Mylan N.V., between October 3, 2017, and July 29, 2019.  He allegedly obtained material nonpublic information from a friend who still worked at Mylar at the time.  The tipper is described only as a “Mylan insider” in the SEC press release, but the DOJ press release calls him an unnamed co-conspirator.
Continue Reading SEC and DOJ Bring Parallel Cases Alleging $8 Million Serial Insider-Trading Scheme

Earlier this week, a near-unanimous[1] United States Supreme Court issued its much anticipated ruling on the SEC’s ability to obtain disgorgement of ill-gotten gains in cases involving securities fraud, FCPA violations, and other securities violations.[2]  Justice Sotomayor, writing for the majority, confirmed in Liu v. SEC[3] that the SEC has the authority to obtain such relief.  The SEC’s authority to obtain disgorgement had seldom been questioned until the Supreme Court itself raised the issue in a footnote in its landmark Kokesh v. SEC decision in 2017.[4]
Continue Reading Supreme Court Affirms SEC’s Authority to Obtain Disgorgement, But Recognizes Limits on Such Relief

The SEC recently announced insider-trading charges against the former senior lawyer at Apple specifically tasked with ensuring insider-trading compliance at the company.[1]  The Department of Justice also addressed this case of “the fox guarding the hen house” by filing criminal charges against the former Apple attorney.  The defendant, Gene Daniel Levoff, denies all charges and vows to defend himself.
Continue Reading Attorney Responsible for Insider-Trading Compliance Faces Charges of…Insider Trading