SEC Charges Seven California Residents in Insider Trading Ring

Three tech company employees along with family and friends charged in $1 million scheme

March 28, 2022 — The Securities and Exchange Commission today announced insider trading charges against three software engineers employed at Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends for allegedly generating more than $1 million in collective profits by insider trading ahead of the company’s positive first quarter 2020 earnings announcement on May 6, 2020.

According to the SEC’s complaint, friends Hari Sure, Lokesh Lagudu and Chotu Pulagam were software engineers at Twilio and had access to various databases relevant to the company’s reporting of revenue. As alleged, around March 2020, they learned through the databases that Twilio’s customers had increased their usage of the company’s products and services in response to health measures taken in light of the Covid-19 pandemic, and concluded in a joint chat that Twilio’s stock price would “rise for sure.”

The SEC’s complaint alleges that despite receiving a company policy that prohibited them from insider trading, Sure, Lagudu and Chotu Pulagam knowingly tipped off, or used the brokerage accounts of, their family and close friends – Dileep Kamujula, Sai Nekkalapudi, Abhishek Dharmapurikar and Chetan Pulagam – to trade Twilio options and stock in advance of its May 6, 2020 earnings announcement while in possession of the confidential information concerning customer usage. According to the complaint, the scheme generated more than $1 million in illegal trading profits.

"We allege that this insider trading ring took advantage of valuable revenue information related to the pandemic at a San Francisco tech company," said Monique C. Winkler, Acting Regional Director of the SEC’s San Francisco Regional Office. "We are holding these alleged tippers and tippees accountable for their roles in the scheme."

The SEC’s complaint, filed in the Northern District of California, charges each of the defendants with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Today, the U.S. Attorney’s Office for the Northern District of California announced criminal charges against Dileep Kamujula.

Read the Full Press Release

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Have a securities law question? Call New York Securities Lawyers at 212-509-6544.

Brooklyn Man Charged in Long-Running International Insider Trading Scheme

A 10-count indictment was filed in federal court in Brooklyn charging Jason Peltz with securities fraud, money laundering, and tax evasion, among other offenses, including related conspiracy offenses. The charged crimes arise out of a long-running insider trading scheme, in which Peltz executed securities transactions in the brokerage accounts of co-conspirators based on material nonpublic information (“MNPI”) from a variety of sources. Peltz was previously arrested on a complaint in December 2020 and will be arraigned on the indictment at a later date.

According to the US Attorney:

As alleged, Peltz used material nonpublic information about publicly traded companies to line his own pockets and then concealed his illegally earned income to avoid paying taxes...This Office will spare no effort to identify and prosecute defendants who seek to profit from insider trading schemes that harm the investing public and undermine the integrity of our financial markets.”

The FBI added: 

As alleged, today’s indictment details a very deliberate attempt by Peltz to illegally profit from receiving and providing advanced knowledge of nonpublic information about publicly traded companies. When one has access to material, nonpublic information, they’re afforded significant knowledge that could give them a competitive edge in stock and options trading. Exploiting this knowledge is illegal, and the FBI will continue to investigate and prosecute those who cheat the system in this way.

Details of the trading and the allegations are available in the government's press release:

https://www.justice.gov/usao-edny/pr/brooklyn-man-charged-long-running-international-insider-trading-scheme

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Sallah Astarita & Cox represents defendants accused of insider trading across the country. To speak to one of their experienced securities lawyers call 212-509-6544.

SEC Charges California-Based Fraudster With Selling “Insider Tips”

The SEC has charged James Roland Jones of Redondo Beach, California, with perpetrating a fraudulent scheme to sell what he called “insider tips” on the dark web.  The dark web allows users to access the internet anonymously and, as such, has often been used to host websites and marketplaces that support or promote illegal activity.  This is the SEC’s first enforcement action involving alleged securities violations on the dark web. 

The SEC’s complaint alleges that, in late 2016 and 2017, Jones accessed various dark web marketplaces, including a website claiming to be an insider trading forum, in search of material, nonpublic information to use for his own securities trading.  According to the complaint, in order to gain access to the insider trading forum, Jones lied about possessing material, nonpublic information.  By doing so, Jones allegedly gained access to the insider trading forum for a short period but was unsuccessful in obtaining valuable material, nonpublic information.  The complaint further alleges that Jones subsequently devised a scheme to sell purported insider tips to others on the dark web.  The SEC alleges that, in the spring of 2017, Jones offered and sold on one of the dark web marketplaces various purported “insider tips” that he falsely described as material, nonpublic information from the insider trading forum or corporate insiders.   According to the complaint, several users paying in bitcoin purchased these tips and ultimately traded based on the information Jones provided.

“This case shows that the SEC can and will pursue securities law violators wherever they operate, even on the dark web,” said David L. Peavler, Director of the SEC’s Fort Worth Regional Office.  “We have committed staff and technology to pierce the cloak of anonymity these wrongdoers try to throw over their crimes.”

The SEC’s complaint charges Jones with violating the antifraud provisions of the federal securities laws.  Simultaneous with the filing, Jones agreed to a bifurcated settlement that, subject to court approval, permanently enjoins him from further violating these provisions, and reserves the determination of disgorgement and civil penalties for a later date.

In a parallel action, the U.S. Attorney’s Office for the Middle District of Florida filed criminal charges against Jones.  

Read the Full Press Release

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Defending SEC Enforcement Investigations Nationwide - Sallah Astarita & Cox -
212-509-6544.

DOJ Closes Its Senator Insider Trading Investigation, Except for Burr

As we posted last week, the FBI was apparently investigating Senators Loeffler, Feinstein, Inhofe and Burr for possible insider trading. Yesterday it announced that it was closing the investigation of all except Burr.

It is important to note that there were probably two investigations going on, one by the FBI and one by the SEC. The SEC's investigations are private, so we won't know about them.

The FBI investigation would be part of a criminal investigation, and given the claims that have been reported in the press by the Senators, it is not much of a surprise that the criminal investigations are closed. There is no word on a pending, or closed SEC investigation.

Feinstein claims her account is in a blind trust, Loeffler claims that her husband was involved in the trades with no involvement by her. Inhofe's trades were reportedly sales of tech companies, not directly coronavirus related, and he claims that he gave instructions in 2018 to his broker to move his portfolio entirely out of stocks and into mutual funds in December 2018. He stated that his adviser has been doing so since then, and he was not aware of or consulted about any transactions.

While Feinstein and Inhofe may have valid defenses, Loeffler's trades are more problematic given the allegation that she sold the same day White House officials briefed her and her Health, Education, Labor and Pensions Committee colleagues about the coronavirus. Her sales, and purchases were coronavirus related, according to press reports.


The fact that the DOJ has shut down a criminal investigation does not mean that the SEC is not investigating. Given the fact that penalties for insider trading from the SEC can be up to three times the profit gained, or loss avoided, that is a significant penalty.

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Mark Astarita is a nationally recognized securities fraud attorney representing investors and financial professionals in a wide variety of arbitration, litigation and investigative matters. He can be reached at 212-509-6544 or by email at mja@sallahlaw.com

FBI Search Warrant Served on Stock Trading Senator

According to multiple press reports, the FBI seized the cellphone of Senator Richard Burr, as part of an investigation into insider trading.

Burr allegedly sold massive amounts of stock and tipped off donors in March after receiving an intelligence briefing on the looming coronavirus pandemic.

The search warrant is unusual. In fact, the involvement of the FBI in an instider trading investigation is unusual. While that may be simply because they are dealing with a United States Senator, it is usually a sign that a criminal investigation is underway.

Congressman Indicted on Insider Trading Charges

New York Republican Rep. Chris Collins has been charged with securities fraud, wire fraud and false statements, the Justice Department announced Wednesday.

Collins, who was the first sitting member of Congress to endorse Donald Trump's presidential bid, surrendered this morning at his attorney's office in Manhattan, according to the FBI.


According to CNN, his attorneys are using a defense that claims that he did not purchase any of the stock in question. That is all well and good, but in this day, you don't need to buy the stock in order to violate insider trading laws - sharing inside information with others is a violation.

 

The Washington Post is reporting that allegation is that the congressman shared bad news about a drug trial a company he himself in an insider in, with his son before it was announced publicly. According to the WP, his son traded on the information and passed the news along to his fiance's father who also sold the stock. The government alleges that the trades allowed the two to avoid $768,000 in losses.

The indictment is not on Pacer at this time, we will update the post when it is available.

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of insider trading and enforcement actions. We represent investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Senators Ask SEC To Launch Insider Trading Investigation Into Wilbur Ross

Three top Democrats asked the chairman of the Securities and Exchange Commission to open an insider trading investigation into Secretary of Commerce Wilbur Ross in a letter sent Wednesday, nine days after Forbes first reported a suspicious transaction involving a company with ties to Vladimir Putin.

More at Forbes.com

Oppenheimer Adviser Pleads to Insider Trading Charges

With insider trading law up in the air after the Second Circuit decision in US v. Newman and the conflicting decision from the First Circuit in US vs. McPhail, there has been a apparent lull in insider trading cases.

That lull may be over. Although the Supreme Court has no yet ruled on the conflict between the Circuits, prosecutors are pushing forward.

Last week a former investment adviser at Oppenheimer pled guilty to charges that he engaged in an insider trading scheme based on information supplied by a childhood friend working at Pfizer Inc.

The charges relate to conduct that began while he was at RBC Capital Markets and then continued at Oppenheimer & Co Inc. According to press reports, the broker admitted that he executed trades based on inside information supplied by a friend at Pfizer who pleaded guilty in May as part of a deal to cooperate with prosecutors.

Under a plea agreement, the broker agreed to forfeit almost $386,000 and not appeal any prison sentence of 2-1/2 years or less.

Ex-Oppenheimer adviser pleads guilty to U.S. insider trading charges:

Board Member Buys Stock, Pleads Guilty to Insider Trading

Let us imagine that you are on the Board of Directors of a large corporation, and at a board meeting you learn that the corporation is going to purchase a smaller competitor, which is a public company. Your corporation's intent to do so has not be publicly announced, and you realize this is the perfect opportunity to make some money. So, the next morning you call your stock broker and buy 10,000 shares of the target company's stock.

And, after the announcement you sell that stock for a $56,000 profit. Pretty smart investing, right?

Well, readers of our blog know better. This is the classic case of insider trading, and the board member pled guilty to criminal charges of insider trading, agreed to pay back his profits of $56,000 plus a penalty of $55,000, and was sentenced to 24 months of probation, 9 months of which are to be served by home confinement. The press reports that he also lost his position on the Board of Directors, and then there is the public shaming by virtue of multiple press reports about the charge and plea.

Original story at Yahoo! Finance

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Sallah Astarita & Cox is a securities law firm which represents investors and brokers across the country in SEC and FINRA proceedings and white collar criminal actions. If you need a securities attorney for an insider trading case, or any securities related matter, call their office at 212-509-6544 or visit their web site


Also see, New York Securities Lawyer web site.

What’s So Wrong With Insider Trading Anyway? | FiveThirtyEight

Interesting analysis of the current state of insider trading law, and the pending Supreme Court case.



What’s So Wrong With Insider Trading Anyway? | FiveThirtyEight

Next Insider Trading Case? Bresch Dumped Mylan Shares Before EpiPen Scandal

Rawstory (let's keep the source in mind) is reporting that Heather Bresch, the CEO of Mylan and next Pharma Bro (Pharma Sis?) dumped more than 10 percent of her shares of the pharmaceutical company’s stock as analysts warned of potential publicity problems withe the EpiPen price hikes.



According to Rawstory, Heather Bresch sold off 100,200 shares of Mylan stock on Aug. 9, the same day the drugmaker released its most recent earnings report amid questions over the swiftly ballooning cost of EpiPens,



Terrible optics, but the story also indicates that the sales were made pursuant to a 10b5 plan, which is used by insiders to plan out the sale of their shares, in advance, to avoid exactly this - an allegation of insider trading.



We haven't seen the plan, but if properly handled, the sales were planned in advance. Of course, we don't know when she adopted the plan, if or when she amended that plan, and she certainly could have terminated it when she learned of the potential scandal - if she didn't realize the potential scandal when she raised the price of the drug.



We will follow this story and post additional news. Meanwhile, read 10B5-1Plans - Insider Trading Defense at SECLaw.com, and the original RawStory article - Heather Bresch dumped more than 100,000 shares of Mylan — just two weeks before EpiPen scandal

What is Insider Trading

"Insider trading" is a term that most investors have heard and usually associate with illegal conduct. Recent government actions, including the criminal case against Martha Stewart have enforced that view.

However, the term "insider trading" actually includes both legal and illegal conduct. The legal version is when corporate insiders, officers, directors, employees and large shareholders, buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC. Many investors and traders use this information to identify companies with investment potential, the theory being, if the insiders are buying the stock, they must know more about their company than everyone else, so it is a good idea to buy the stock.

Reports of transactions by insiders are filed with the SEC on Forms 3, 4 and 5, and the SEC has an excellent overview of these forms and the requirements for filing of same. Most of the internet based financial quote sites have insider trading information for each particular security. Visit Yahoo Finance and select a security, then select the menu choice for Insider Transactions. Here is theinsider trading page for Citigroup for an example.

The insider trading definition that we are concerned about is the buying or selling of a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Over the last 10 years the SEC and the courts

have greatly expanded this definition, to include trading by individuals whose "relationship of trust" is so remote as to be non-existent, but that discussion is left for another day. While myself, and most other securities attorneys believe that the concepts of insider trading have been expanded beyond all permissible bounds, the law today is that if material information about a company, or about the company's stock, is obtained in violation of any duty to any person, and used to trade, the trader is guilty of insider trading.


Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information. Examples of insider trading cases that have been brought by the SEC are cases against:

• Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments; 
• Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information; 
• Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded; 
• Government employees who learned of such information because of their employment by the government; 
• Employees of financial printers who learned of the information during the course of their employment; and 
• Other persons who misappropriated, and took advantage of, confidential information from their employers. 

In recent years, the SEC and the Courts have expanded this further, and insider trading can now include trading by the random man in the street if the SEC believes that he obtained the information from someone who should not have the information. See SECLaw Blog posts on insider trading for more information. In my opinion, this has all gone too far, and the SEC needs to be reigned in on the expansion of insider trading liability.

The theory behind the prohibition on insider trading is that it undermines investor confidence in the fairness and integrity of the securities markets. Thhe SEC claims that the detection and prosecution of insider trading violations as one of its enforcement priorities, and all investors must be aware of the potential danger in trading on a "tip" from someone who knows non-public information regarding a security.

The SEC adopted new Rules 10b5-1 and 10b5-2 to resolve two insider trading issues where the courts have disagreed. Rule 10b5-1 provides that a person trades on the basis of material nonpublic information if a trader is "aware" of the material nonpublic information when making the purchase or sale. The rule also sets forth several affirmative defenses or exceptions to liability. The rule permits persons to trade in certain specified circumstances where it is clear that the information they are aware of is not a factor in the decision to trade, such as pursuant to a pre-existing plan, contract, or instruction that was made in good faith.

Rule 10b5-2 clarifies how the misappropriation theory applies to certain non-business relationships. This rule provides that a person receiving confidential information under circumstances specified in the rule would owe a duty of trust or confidence and thus could be liable under the misappropriation theory.

Insider trading carries severe civil and criminal penalties. If you are contacted by a regulatory agency regarding trades that you made, you should contact Mark Astarita of Sallah Astarita & Cox, at mja@sallahlaw.com. For more general information regarding insider trading and the SEC's views of it, read Insider Trading -A U.S. Perspective.

Related Articles

Wikipedia - Insider Trading
CNBC - Insider Trading
SECLaw Glossary - Insider Trading

Traders in China and Hong Kong Paying $920,000 to Settle Insider Trading Case

The SEC has settled insider trading cases with two traders in China and Hong Kong, who agreed to pay more than $920,000 to settle the charges against them.

Cousins and business associates Zhichen Zhou and Yannan Liu, whose assets were frozen by an emergency court order when the SEC’s complaint was filed against them last month, must disgorge their entire ill-gotten profits of $306,929.59 plus pay penalties of $306,929.59 each. The court approved the settlement today.

The SEC’s complaint alleged that Zhou and Liu traded two health care company stocks (MedAssets Inc. and Chindex International) based on nonpublic information about their impending acquisitions by private equity firms. Liu was a private equity associate at TPG Capital, which had ties to both of the deals, and maintains a personal relationship with at least one current TPG Capital employee.
“Insider trading is more damaging than it is profitable, as experienced by these traders.  First they had their assets frozen by a court order, and now they must pay three times the amount of their insider trading profit to settle the case,” said Julie K. Lutz, Director of the SEC’s Denver Regional Office.
Zhou and Liu, who reside in Beijing and Hong Kong respectively, settled the charges without admitting or denying the allegations.  They consented to the final judgment permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

SEC Press Release

Insider Trading Proves Costly for Father and Son and Friend

Trading on inside information can be profitable, might be illegal, and if it is illegal, it is costly.

The SEC has announced charges against a father, son, and friend in Northern California with insider trading in advance of a merger of health care companies based on confidential information the father learned from a close friend working at one of the companies.

The SEC alleges that John McEnery III breached a duty of trust and confidence owed to his friend when he traded and tipped others to trade in the stock of Clarient Inc. upon learning about its impending acquisition by GE Healthcare.  McEnery tipped his son John McEnery IV as well as Michael Rawitser, a longtime friend of McEnery III.

Following the public announcement of the acquisition, Clarient’s stock price rose by 33 percent and the trio profited by a total of more than $50,000.

The McEnerys and Rawitser agreed to pay approximately $170,000 combined to settle the charges, more than triple the amount of their alleged profits.

When you are accused of securities fraud, the penalties can be severe, and could include criminal charges. Make sure that you have experienced counsel - Call Sallah Astarita & Cox - 212-509-6544

SEC Charges Father and Son and Friend With Insider Trading

Massive Insider Trading Scheme Uncovered - Lots of Blame to Share.

A massive insider trading scheme has allegedly been uncovered by the SEC and the DOJ, according to the SEC, involving computer hacking, foreign investors, tens of millions of dollars, and years of trading activity.

Yesterday the Commission announced the filing of charges against 32 defendants, alleging that they hacked their way into computers and traded on stolen nonpublic information regarding corporate earnings announcements from the wire services who were holding earnings releases for the public companies. The press release is online at http://www.sec.gov/news/pressrelease/2015-163.html and the complaint is at the commission’s web site at http://www.sec.gov/litigation/complaints/2015/comp-pr2015-163.pdf.

I have been involved in cases involving allegations of computer fraud, and trading on undisclosed earnings announcements in the past in the URL Guessing cases,  but that was more of a misunderstanding on the part of the SEC Staff and the sloppiness of the issuers, than an organized hack. This case, at least according to the SEC, involves 5 years of advanced computer techniques to hack into two or more (un-named)  newswire services and stealing hundreds of corporate earnings announcements before they were released.

Some investors expressed surprise that the hacking of a wire service could be profitable. After all, there is a very small window of time to get the information and trade on it when you are dealing with earnings reports. One would assume that the earnings reports are delivered to the wire services minutes or an hour before its release.

You would also think that issuers would have learned from the URL Guessing cases. But apparently they have not. According to the SEC’s complaint, some of these issuers were uploading their releases days before the announcement, giving the hackers plenty of time to hack and trade.

For example, according to the complaint, while Zumiez uploaded its press release to the wire service at 1:29 pm for a 4:00 pm release, Acme Packet uploaded its press release at 5:53 pm, for release the next day at 4:05 pm, leaving the press release on a third party server for nearly 24 hours.

According to the complaint, the hacking went on for 5 years, and during that time (2010 until 2014), the hacker defendants hacked into the newswires'  computer systems and stole over 100,000 press releases before they were publicly issued.

And the hacking was apparently profitable. The SEC is alleging that the Defendants made over 100 million dollars in profits. However, keep in mind that the SEC does not concern itself with the losses. Not every trade pans out, and not every trade is profitable. The SEC however is only concerned with profits, and does not count losses.

One has to wonder what these wire services were doing all of these years, and why the hacking was not noticed.

One also has to wonder why the SEC, FINRA, and the exchanges did not notice the irregularities. Granted, we can assume that some of the press releases did not hold valuable information and there were no trades made, but according to the complaint the hackers were downloading press releases for years from the same two wire services.

While the defendants allegedly made significant sums of money, and, according to the SEC, hacked into computers to do so, one has to wonder where the responsibility of the wire services and the issuers lies in all of this.

First, the wire services had their computers hacked for years without noticing the hacks and allowing them to occur with over 100,000 press releases. While the SEC did not identify the wire services, they should have some liability to the shareholders of the issuers involved.

And the issuers – who surely share some of the blame, include Walter Energy, Caterpillar, Inc., Treehouse Foods, RadioShack, Brocade, Panera Bread, and others. Where were they during all of this – uploading their press releases, containing what is apparently very valuable information, days or hours in advance to unsecured third party vendors? Surely that is negligence and a breach of a duty to protect corporate information.

And lastly, the SEC. While they are now issuing press releases about what a great job they did in uncovering this alleged scheme, one has to wonder what the heck took them so long. These defendants are allegedly stealing over 100,000 press releases, for years, and generating millions of dollars in profits and the SEC never catches on until 4 years go by?

Corporate Attorney Sells Stock, Settles Insider Trading Case

You would think a corporate attorney would know better. The SEC announced the settlement of an insider trading complaint against an attorney and his wife.

The SEC alleged that while serving as outside counsel to a pharmaceutical company, the attorney learned that the company was on the brink of announcing a significant decline in expected revenue due to an unanticipated drop in orders for its top-selling drug.  According to the SEC, he sold his entire investment within 48 hours of getting the nonpublic information from company officials who sought the disclosure advice of his law firm.  He tipped his wife, who also sold all of her shares.  The day after his wife sold her stock, the company issued a press release revealing the expectation of decreased sales of the drug and the consequent expectation of reduced revenue, and stock price fell more than 35 percent. 

The SEC claimed that the attorney and his wife did all of this to avoid losses of nearly $45,000.

They agreed to settle the case by paying $90,000, and attorney agreed to be suspended from practicing as an attorney before the SEC on behalf of any publicly traded company or other entity regulated by the agency.

 

For more information - SEC.gov | SEC Charges Corporate Attorney and Wife With Insider Trading on Client’s Confidential Information

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Fallout from Landmark Insider Trading Decision Begins

A ruling that tossed out the insider trading convictions of two hedge fund managers may have opened the door for others charged with wrongful trading to get their cases or pleas dismissed.

US District Court Judge, Andrew L. Carter Jr.,  ordered the lawyers for the defendants in an unrelated insider trading case to come to court on Dec. 18 to discuss the implications of the ruling.

The day before, a panel of the United States Court of Appeals for the Second Circuit overturned the convictions of the hedge fund managers Anthony Chiasson and Todd Newman. Judge Carter said in his brief order that he wanted to discuss whether the appellate ruling affects a guilty plea by at least one of five defendants. In the case he is overseeing, five friends have been accused of receiving a secondhand tip about IBM’s plans to acquire SPSS for $1.2 billion in October 2009.

While the press is heralding the Second Circuit ruling as historic and ground breaking, it really isn't anything new. We have always taken the position that the accused insider trader has to know that the information he received was illegally obtained. Sometimes that is easy, but in many of these cases, particularly in the ones with lower level tippees, that is nearly impossible, since they typically do not know how the information was obtained.

"We conclude that, in order to sustain a conviction for insider trading, the government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit" 

Hopefully this ruling will encourage the other circuit courts to return these cases to the law, and help stop innocent conduct from being turned into guilty conduct.

For more information, go to Some Accused of Insider Trading May Rethink Their Guilty Pleas  


Related:

Steve Cohen "ebullient" after learning of the Second Circuit decision

US appeals court vacates two insider trading convictions

DealBook: Appeals Court Overturns 2 Insider Trading Convictions 

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including SEC and FINRA investigations, insider trading cases, securities arbitrations and class actions, nationwide. Mr. Astarita was on the defense team of the original "misappropriation theory" case of insider trading and defends targets of insider trading investigations. Mr. Sallah and Mr. Cox are former SEC Enforcement Attorneys, who have prosecuted, and successfully defended, insider trading cases.  For more information call 212-509-6544 or send an email.

New Computer Programs to Detect Insider Trading

When you are accused of insider trading, it is not the time to try out a new attorney, or to contact your sister's divorce attorney for help. The SEC is serious about insider trading, and if they are looking at your innocent trades, you need to be able to respond in an intelligent, well thought out manner.

This week the chief of the market abuse unit at the SEC acknowledged that the Commission is taking a trader-based approach to surveillance. “The way is to turn the approach upside down in a way that would reveal relationships,” Hawke said, adding that they look at the relationships and investments of traders.

He said new database software has helped the agency find connections between people. While that is all well and good, the farther out that software takes relationships, the more false positives it is going to find. When it starts linking your trades to Kevin Bacon's trades it will have gone too far. However,  at the 3rd and 4th degree of separation, we are going to see more innocent investors caught up in insider trading investigations.

For more information - SEC turning insider trading fight ‘upside down"

--- The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of insider trading investigations and trials. Call us before you speak to the SEC investigator or the FBI agent. Do not wait for the Wells Notice, since that is when they have decided to charge you with a violation.  For more information call 212-509-6544 or send an email.

Carl Ichan, Phil Michelson and William Walters Investigated for Insider Trading

The U.S. Federal Bureau of Investigation and the Securities and Exchange Commission are investigating possible insider trading involving billionaire investor Carl Icahn, golfer Phil Mickelson and Las Vegas gambler William Walters, a source familiar with the matter said.

Federal investigators are looking into whether Mickelson and Walters may have traded illegally on private information provided by Icahn about his investments in public corporations, the source told Reuters, confirming a report by the Wall Street Journal on Friday. Icahn, Mickelson and Walters were not immediately available for comment.

The investigation centers on suspicious trades in Clorox Co options days before Icahn announced a bid to acquire the company in 2011, according to the Journal, citing people briefed on the probe.

Icahn had accumulated a 9.1 percent stake in Clorox in February 2011. In July, the activist investor made an offer for the company that valued it at above $10 billion and sent its stock soaring. Investigators were also looking into trades that Mickelson and Walters made related to Dean Foods Co , the Journal cited the people as saying.

For more information, U.S. investigating Icahn, Mickelson in insider trading probe
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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions and insider trading trials. We represent investors, financial professionals and investment firms and brokers nationwide. For more information contact Mark Astarita at 212-509-6544 or email us.

Insider Trading Tips - It is also a Crime

More hints for avoiding an insider trading charge. According to the SEC, three Qualcomm executives decided to purchase the securities of an acquisition target after reading work emails and discussing the trades by telephone.

The SEC charged three former sales managers at San Diego-based Qualcomm Inc. with insider trading ahead of a major acquisition announcement. As news leaked about the impending acquisition and the two companies subsequently announced it in a joint news release, Atheros' stock price jumped 20 percent. The executive sold their securities to realize quick profits.

Anyone who reads this blog, or who follows insider trading cases knows that this is a classic case of insder trading - assuming the allegations to be true. However, what some folks don't realize, is that it is a crime as well. These defendants are now aware of it - the U.S. Attorney's Office for the Southern District of California today announced criminal charges against two of them.

The SEC alleges that after learning confidentially that Atheros was the target of a Qualcomm acquisition, all three sales managers proceeded to purchase Atheros securities on Jan. 4, 2011. None of them had ever previously traded in Atheros securities. News of the acquisition began leaking out through media reports that same afternoon, and the two companies formally announced the merger agreement on January 5. After selling all of the securities they had purchased, Cohen's illegal trading profits mounted to more than $200,000, and Herman and Fleischli made profits of $30,000 and $3,000 respectively.

The SEC's complaint charges Cohen, Herman, and Fleischli with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions.

For more information: SEC Charges Three Sales Managers With Insider Trading Ahead of Major Acquisition

Related articles

• SEC Expanding the Scope of Insider Trading 
• SECLaw's Collection of Important Insider Trading Cases