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Category Archives: Insider Trading

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Article Provides the State of Regulation as to Insider Trading Compliance at Broker-Dealers

Posted in Broker-Dealer Regulation, FINRA Enforcement, Insider Trading, SEC Enforcement

Insider trading is back in the spotlight.  The SEC and FINRA are combatting insider trading on many fronts, including through the enforcement of requirements that broker-dealers implement procedures for preventing and detecting insider trading.  Recent statements from the agencies and enforcement actions illustrate that, while individual bad actors are still a clear target, broker-dealers that… Read More

Second Circuit Maintains Expansive View of Civil Liability for Insider Trading

Posted in Enforcement, Insider Trading, SEC Enforcement

On February 18, 2014, in SEC v. Contorinis,[1] the Court of Appeals for the Second Circuit affirmed an order requiring Joseph Contorinis to personally disgorge more than $7 million in insider trading profits realized by a fund he co-managed, even though he did not personally receive those profits. In doing so, the court continued its… Read More

New FINRA Supervision Rules Impact Broker-Dealers’ Insider Trading Procedures and Supervisory Controls

Posted in Broker-Dealer Regulation, Enforcement, FINRA Enforcement, Insider Trading, SEC Enforcement

Financial Industry Regulatory Authority (FINRA) rules require member firms to establish and maintain a system of written procedures to supervise the activities of its members. On December 23, 2013, the SEC approved new FINRA rules. Among other provisions, the new rules require procedures for detecting and reporting insider trading and impose heightened standards on supervisory… Read More

Is Exercising Employee Stock Options Illegal Insider Trading? Maybe

Posted in Broker-Dealer Regulation, Enforcement, Insider Trading, SEC Enforcement

Amidst the flurry of Securities and Exchange Commission (SEC) cases involving improper employee stock option backdating several years ago, many commentators opined on the potential insider trading implications of companies’ issuance of stock options to officers and directors. Yet the literature is surprisingly scant concerning the potential insider trading implications of an insider exercising her… Read More

Insider Trading in Mutual Funds: Do Traditional Theories Apply?

Posted in Insider Trading, SEC Enforcement

A federal court of appeals recently held out the possibility that insider trading prohibitions—at least under the classic theory—do not apply to mutual fund redemptions. The U.S. Court of Appeals for the Seventh Circuit recently reversed and remanded a summary judgment granted to the SEC in a case alleging that a mutual fund’s chief compliance… Read More