July 26, 2022

Insider Trading: Data Analytics Keeps Bringing Down the Bad Guys

In our “Insider Trading Policies” Handbook, we’ve long noted that the SEC has touted its use of data analytics to identify suspicious trading patterns. A year ago, I blogged that those tools seem to be getting even more advanced. That’s a useful point to know & share if you’re on the compliance side, trying to instill fear & obedience. If you’re a bad guy, it’s not such happy news.

Yesterday, the SEC announced that it’s added a few more notches to its “data analytics” belt. Here’s more detail:

The Securities and Exchange Commission today filed insider trading charges against nine individuals in connection with three separate alleged schemes that together yielded more than $6.8 million in ill-gotten gains. Those charged include a former chief information security officer (CISO), an investment banker, and a former FBI trainee, all of whom allegedly shared confidential information with their friends, who then traded on that confidential information. Each of the three actions announced today originated from the SEC Enforcement Division’s Market Abuse Unit’s (MAU) Analysis and Detection Center, which uses data analysis tools to detect suspicious trading patterns.

The SEC also announced insider trading charges yesterday against a retired US Congressional Representative and former prosecutor who allegedly traded on MNPI he received as a consultant after leaving Congress. Insider trading: don’t do it! See our “Insider Trading Policies” Practice Area for lots of resources that can help you convince your colleagues, friends & clients to stay on the right side of the law.

Liz Dunshee