The SEC charged an employee in an international law firm’s IT department with insider trading ahead of several mergers and acquisitions involving firm clients being advised on the deals.
The SEC alleges that the employee, a senior information technology professional at Wilson Sonsini Goodrich & Rosati, had access to nonpublic information in the firm’s client-related databases and garnered more than $300,000 in illicit profits by trading in advance of merger announcements. He began by insider trading in accounts in his own name, but shifted course when a lawyer at his firm was charged by the SEC and criminal authorities in an entirely separate insider trading scheme. After immediately liquidating the remaining securities that he had purchased on the basis of nonpublic information, the employee waited about 18 months and then continued his insider trading in a brokerage account held in the name of a relative living in Russia. His concealment efforts failed, however, when SEC investigators were able to dissect a suspicious pattern of trades and trace them back to him.
“Insider trading by employees of law firms and other professional organizations is an important enforcement focus for us,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit. “We’ve enhanced our detection capabilities and we’re refining our investigative approaches to enable us to more easily identify those who abuse their positions of trust and confidence.”
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