June 30, 2023
Insider Trading Day at the SEC
Based on a statement released yesterday by Gurbir Grewal, Director of the Division of Enforcement at the SEC, it appears that yesterday was the SEC’s “Insider Trading Day,” with the agency bringing charges against 13 defendants in four separate insider trading schemes. Grewal’s statement notes:
Public trust is essential to the fair and efficient operation of our markets. But when public company insiders take advantage of their status for personal gain, as we allege here, the investing public loses confidence that the markets work fairly and for them. Today’s actions reaffirm our commitment to leveraging all the tools at our disposal, including our data analytics initiatives, to investigate these abusive trading practices, hold accountable bad actors and ensure the integrity of our markets.
The actions that the SEC brought include: insider trading involving a director of SPAC which allegedly generated over $20 million in profits; trading by a former employee of a pharmaceutical company and others based on information about clinical results for a COVID-19 antiviral treatment; trading based on a tip by an employee regarding a potential acquisition; and trading based on information pilfered from a girlfriend’s laptop while she was working from home during the COVID-19 pandemic.
While I don’t believe that Insider Trading Day will gain traction as a national holiday (although I admit that it would be nice to have another holiday, even if it is dedicated to insider trading enforcement), the SEC was clearly seeking to make a statement by announcing all of these actions on the same day. For those charged with insider trading compliance, these cases provide a good demonstration of the many ways in which things can go awry when individuals are tempted to engage in illegal insider trading and tipping. For those who might be tempted to engage in this sort of conduct, the Insider Trading Day cases are a good reminder of the overwhelming legal peril that insider trading and tipping can put you in, including spending time in a correctional institution.
– Dave Lynn