Header graphic for print
Cady Bar the Door Insight & Commentary on SEC Enforcement Actions and Related Issues

Category Archives: Insider Trading

Subscribe to Insider Trading RSS Feed

Ghost of David Sokol Haunts SEC’s Insider Trading Case against Szymik and Peixoto

Posted in Insider Trading, SEC Litigation

It never actually became a case, but maybe you remember this matter from a few years ago.  In January 2011, former Berkshire Hathaway executive David Sokol bought about 100,000 shares in Lubrizol Corporation shortly before suggesting to Warren Buffett that Berkshire consider acquiring the company.  Berkshire did acquire Lubrizol on March 14th, and the company’s… Continue Reading

What if the Apple/Beats story is fake?

Posted in Compliance, Insider Trading

The internet blew up last week when rumors leaked that Apple was preparing to buy Dr. Dre’s and Jimmy Iovine’s Beats headphones company for $3.2 billion.  Steve Jobs never would have done that!  It’s confusing!  It’s brilliant!  Amid the noise, Farhad Manjoo had a suggestion: “If this is true, Tim Cook should get advice from… Continue Reading

Give Me That Old-Time Insider Trading

Posted in Insider Trading

Recently I had a question that required me to review Don Langevoort’s comprehensive insider trading treatise.  It got me thinking about the roots of insider trading law.  Specifically, the pre-SEC, pre-10b-5 insider trading courts used to deal with. Back then, securities were frequently traded in face-to-face transactions, and not on exchanges, certainly not electronic ones. … Continue Reading

S.D.N.Y. Prosecutors Get Martoma, but Probably No Closer to Steve Cohen

Posted in Insider Trading

Yesterday, a jury in the Southern District of New York convicted Mathew Martoma in what is in dollar terms the largest insider trading case in captivity.  As we’ve discussed before, Martoma had been accused of paying a medical professor at the University of Michigan for information related to clinical trials of a potential Alzheimer’s drug… Continue Reading

Companies Finding Little Use for Quick, Efficient Way to Avoid Liability

Posted in Compliance, Insider Trading

When I was on the SEC’s enforcement staff, I had a case once where we were pretty sure our prospective defendant had engaged in insider trading.  Our conversation with his lawyer went something like this:¹ Us:       Did your guy sell those shares on the basis of material, nonpublic information? Him:   No way.  In fact, he… Continue Reading

SEC Sues Badin for Insider Trading in Smithfield Foods Acquisition

Posted in Insider Trading, SEC Litigation

The May 29th announcement that China-based Shuanghui International Holdings had agreed to acquire Virginia-based Smithfield Foods came with a lot of news value.  First, the $4.7 billion price tag for Smithfield is large by any measure.  Second, this deal – the largest-ever acquisition of a U.S. company by a Chinese company – has offered great… Continue Reading

SEC Publishes Report on Reg. FD and Social Media – Joy, Vexation Follow

Posted in Insider Trading

You probably remember a dustup from a few months ago when the SEC threatened to sue Netflix for violations of Regulation FD.  Basically, the rule says that when a public company gives material nonpublic information to anyone, the company must also publicly disclose the same information to all investors.  Netflix’s CEO, Reed Hastings, had arguably… Continue Reading

Several Thoughts about the Largest Insider Trading Case in History

Posted in Insider Trading, Investment Advisers, Parallel Proceedings, SEC Litigation

The SEC and Justice Department filed a massive insider trading case in the Southern District of New York yesterday.  The actual defendants include University of Michigan neurology professor Sidney Gilman, hedge fund advisory firm CR Intrinsic Investors LLC, and Matthew Martoma, a portfolio manager at CR Intrinsic between 2006 and 2010.  According to the Wall… Continue Reading

Three More Thoughts about Securities Enforcement Forum 2012

Posted in Insider Trading, SEC Litigation, Whistleblowers

Several more things from the Securities Enforcement Forum 2012 occurred to me after my last post, and I thought I would note them here. Rajat Gupta First, in a discussion of recent insider trading cases, Judge Sporkin supposed that Rajat Gupta might have avoided criminal prosecution if he had settled the SEC’s initial administrative case… Continue Reading

3½ Thoughts about the Consolidated Audit Trail

Posted in Broker-Dealers, FINRA, Insider Trading, SEC Structure

On July 11th, the SEC adopted Rule 613, a rule that requires national securities exchanges and FINRA “to jointly submit a comprehensive plan detailing how they would develop, implement, and maintain a consolidated audit trail that must collect and accurately identify every order, cancellation, modification, and trade execution for all exchange-listed equities and equity options… Continue Reading

Three Thoughts about Rajat Gupta

Posted in Insider Trading

You have surely heard by now that Rajat Gupta was convicted on four of six counts in his insider trading trial last Friday.  Amid a number of recent high-profile flops, Gupta’s conviction is a bright spot for the Justice Department, and in particular for prosecutors in the Southern District of New York and the SEC. … Continue Reading

SDNY Explores Officer-and-Director Bar Factors

Posted in Insider Trading, SEC Litigation

In its enforcement actions, the SEC almost always seeks injunctions that prohibit the defendants from violating specific securities laws.  Their value lies in the threat of contempt for violation of the order (a largely illusory threat) and collateral consequences for various aspects of the defendant’s business (can be quite serious).  For defendants who are not… Continue Reading