Header graphic for print
The BD/IA Regulator Providing securities regulatory, enforcement and litigation trends for broker-dealers, investment advisers and investment funds

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 employ bad actors, or whose procedures do not adequately prevent or detect insider trading, may also find themselves in the agencies’ crosshairs, potentially facing large penalties or sanctions.

The Financial Fraud Law Report recently published an article authored by Morrison & Foerster LLP attorneys who advise broker-dealers on compliance matters exploring the current state of SEC and FINRA regulation and recent precedent regarding the role of broker-dealers in preventing and detecting insider trading.  The article also offers guidance on how firms can avoid liability in this area, describing best compliance practices with respect to information barriers, monitoring and surveillance of communications, monitoring and surveillance of trading activity, watch and restricted list procedures, and training.  The article will be of interest to broker-dealers of all sizes.