Insider Trading Results in Bar for Corporate Board Member

The SEC has charged yet another insider with trading on material, non-public information. This time a board member of the company is accused of purchasing his company's stock ahead of the company's sale to a private equity firm. As a defense attorney, my inclination is to believe the SEC is wrongly accusing the insider. But then I learned that he and his tippees agreed to settle the SEC's charges by paying more than $500,000.

Trading on inside information can be costly. The SEC's demands are typically for a return of all profits, plus a penalty of two times those profits, plus interest, and a permanent injunction. In some cases, such as this one, the settlement also includes a provision that the defendant is prohibited from being an officer or director of a public company. Further compounding the issue is that the recent revisions to Regulation D will prevent him from being affiliated with a company who is taking advantage of the exemption.

SEC Charges Vitamin Company's Former Board Member and Brothers With Insider Trading

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