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Cady Bar the Door Insight & Commentary on SEC Enforcement Actions and Related Issues

Category Archives: Insider Trading

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Second Circuit Limits Insider Trading Law for Remote Tippees

Posted in Insider Trading, SEC Litigation

Matt Levine is a big jerk.  He just sits there at Bloomberg following events in finance and securities enforcement, and then writes interesting things about those events really quickly and with insight that no one else has thought of yet.  It’s so obnoxious.  Today he struck again with this piece about the Second Circuit’s huge… Continue Reading

Proposed “Fair Fund” for CR Intrinsic Case Stirs Dustup among SEC’s Commissioners

Posted in Insider Trading, SEC Litigation

In the right kind of enforcement action, the SEC can take the money it’s generated and set up what’s called a Fair Fund to redistribute that money to harmed investors.  But what is the right kind of case?  This procedure was established as part of the 2002 Sarbanes-Oxley law, and it’s relatively easy to contemplate… Continue Reading

Rengan Rajaratnam Settlement Exposes Slightly Weak Point in SEC’s Newish Admissions Policy

Posted in Insider Trading, Parallel Proceedings, SEC Litigation

You remember Rengan Rajaratnam, right?  He broke the S.D.N.Y.’s long streak of insider trading victories when a jury acquitted him in July.  I wondered what the effect on his case with the SEC would be.  Would he settle?  Would he take that one to trial and win, too? Well, he and the SEC came to… Continue Reading

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