The Insider Trading Law Report
The premier source targeting insider trading law and regulation.
Each month the Report brings you summaries of noteworthy case law on insider trading, the latest developments regarding Rule 10b5-1 stock trading plans, as well as important news regarding insider trading enforcement and regulation.
Illegal Insider Trading
Enforcement of illegal insider trading is on the upswing. Companies and firms can be prosecuted for the fraudulent behavior of their employees.
Regulators want to protect investors by providing a level playing field, and cracking down on illegal insider trading is one of the most important means at their disposal. But, the Report is not just for those who prosecute or defend individuals or companies charged with illegal insider trading.
Rule 10b5-1 stock trading plans, the “safe harbor” for corporate executives, are being scrutinized closely. While the Rule 10b5-1 stock trading plan was created solely with executives in mind, according to the Wall Street Journal, the use of these trading plans by non-executive directors has increased 55% since 2008, compared to a 36% rise among all corporate insiders.
Executives, non-executive directors and counsel for public companies, as well as law firms who represent public companies, must be aware of the latest developments regarding Rule 10b5-1 stock trading plans or face potential enforcement consequences. This is an area of enforcement that is growing rapidly.
As enforcement of illegal insider trading and Rule 10b5-1 stock trading plans increases, shareholder derivative actions based on these violations will also increase, leaving public companies additionally vulnerable.
One in five insider trading cases brought the by the U.S. Securities and Exchange Commission (SEC) are brought against hedge funds and their advisers. The hedge fund advisory firm CR Intrinsic Investors paid more than $600 million to settle insider trading charges, and the hedge fund advisory firm Sigma Capital Management has paid nearly $14 million.
SEC Commissioner Luis Aguilar has publicly stated that investment advisory firms need to assess whether they have effective policies and procedures to identify and prevent the illegal use of inside information. He continued that guidance and training must be provided and effective control processes must in place to ensure that illegal insider trading is prevented. He warned that the failure to establish such safeguards leaves firms open to potential enforcement consequences.
Knowledge is Power
The Insider Trading Law Report will help you to stay on top of the law and regulatory environment. Knowledge is not just power, it’s protection. Ultimately, subscribing to the Report will save you time, reduce your costs, and help you better protect your client, company or firm.