insider trading

Prosecuting Securities Fraud Under Section 17(a)(2)

By Wendy Gerwick Couture March 20, 2019 by renholding

Traditionally, securities fraud has been civilly enforced under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and criminally prosecuted under Section 32 of the Exchange Act. Recently, however, the SEC has increasingly asserted claims under Section 17(a)(2) …

Arnold & Porter Discusses Insider Trading’s Personal Benefit Test After Martoma, Gupta, and Other Recent Cases

By Andrew Bauer, Jonathan Green and Daniel Hawke February 19, 2019 by renholding

On January 24, former SAC Capital Advisors portfolio manager Mathew Martoma petitioned the Supreme Court to review his 2014 conviction for insider trading.  Martoma’s conviction stems from activity in 2008 when he paid a doctor from the University of Michigan …

Blue Sky Banter Podcast: John Coffee on the State of Insider Trading Law

By Reynolds Holding November 8, 2018 by renholding

Professor John C. Coffee, Jr. of Columbia Law School speaks with John Metaxas (Columbia Law ’84) about insider trading law and his role on a new task force created to develop proposals for reform in this area. The task force …

Insider Trading: Are Insolvent Firms Different?

By Andrew Verstein November 5, 2018 by renholding

Are insolvent firms different from solvent firms with respect to insider trading law and policy? Formally, the law does not change. But economic realities and non-securities law duties do. As a result, the insider trading landscape changes considerably. The law …

How Institutional Ownership Affects Insider Trading

By Stephen A. Hillegeist and Liwei Weng October 18, 2018 by renholding

Institutional owners have traditionally been thought of as passive investors that have little concern for or influence on corporate policies and decisions. In contrast, recent literature shows that while many institutions are passive in terms of their investment choices and …

Insider Trading and the Myth of Market Confidence

By John P. Anderson October 10, 2018 by renholding

Promoting public confidence in securities markets is a policy goal that is frequently cited by commentators, Congress, the courts, regulators, and prosecutors for the adoption and vigorous enforcement of insider trading laws.

For example, in the seminal insider trading case …

Insider Trading Ahead of Cyber Breach Announcements

By Zhaoxin Lin, Travis R.A. Sapp, Jackie Rees Ulmer and Rahul Parsa September 4, 2018 by renholding

On March 14, 2018, the Securities and Exchange Commission charged a former chief information officer of Equifax with insider trading. The complaint alleged that he profited from selling stock ahead of the September 2017 public announcement of a major cybersecurity …

What Happened to “Meaningfully Close Personal Relationship” in Insider Trading?

By Peter Henning August 22, 2018 by renholding

Did insider trading law almost devolve into an effort to define  what kind of relationship a tipper and tippee must have for  a defendant to be liable? And was any federal judge or jury qualified to say? Since the Second …

Tippees and Tippers:­­ The Impact of Martoma II

By John C. Coffee, Jr. July 23, 2018 by renholding

This is a column for insider trading junkies—a special breed who love all the nuances in this very nuanced subject. Late last month, a Second Circuit panel did something fairly unusual: It withdrew a 2017 decision and substituted a new …

SEC’s Jackson Calls for Curbing Executives’ Ability to Cash Out on Buybacks

By Robert J. Jackson, Jr. June 12, 2018 by renholding

Thank you so much, Neera [Tanden], for that very kind introduction. I’ve long admired all that you and everyone here at the Center for American Progress do to promote a progressive economic agenda. And I share your commitment to making

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Post-Earnings Announcement Drift and Corporate Insider Trading

By Christina Dargenidou, Ian Tonks and Fanis Tsoligkas June 5, 2018 by renholding

Post-earnings announcement drift (PEAD) is a well-documented and puzzlingly persistent market anomaly. Companies that report earnings higher than expected typically experience an upward drift in their stock prices while those that report earnings below what was anticipated see a downward …

Latham & Watkins Discusses New SEC Guidance on Cybersecurity

By Jennifer C. Archie and Serrin Turner June 5, 2018 by renholding

With so much boardroom attention on cybersecurity, directors continue to focus on the Securities and Exchange Commission (SEC) guidance issued earlier this year and its implications. The guidance adds specific expectations for disclosure controls and incident response procedures, and reiterates …

Can Adverse Effects of Private Management-Investor Meetings Be Mitigated by Board Independence?

By Robert M. Bowen, Shantanu Dutta, Songlian Tang and Pengcheng Zhu May 7, 2018 by renholding

Private meetings between management and investors (site visits) occur worldwide and are generally held at corporate headquarters with invited investors and sell-side analysts.  Ng and Troianovski (WSJ, 2015) report that U.S. investors spend $1.4 billion a year for face time …

Legal Insider Trading in Europe Makes the Case for Enforcement

By Wolfgang Aussenegg, Ranko Jelic and Robert Ranzi May 3, 2018 by renholding

Evidence about the relative importance of private and public enforcement of securities laws for financial markets is inconclusive. The recently introduced Market Abuse Directive (MAD) (2003/6/EC) sets a European Union (EU) standard for regulation of insider dealing and market manipulation. …

Insider Trading’s Legality Problem

By Miriam H. Baer May 1, 2018 by renholding

Last year, when the Supreme Court revisited the topic of insider trading in Salman v. United States, scholars rehearsed a familiar debate: Should Congress enact a statute that explicitly defines insider trading? Or should it stick with the status …

Debevoise Discusses the New SEC Cybersecurity Guidance

By Luke Dembosky, Jeremy Feigelson, Matthew E. Kaplan, Jim Pastore and Paul M. Rodel March 26, 2018 by renholding

On February 21, 2018, the SEC issued new Guidance regarding cybersecurity disclosure and governance requirements applicable to SEC reporting companies. In our earlier Client Update on this topic, we discussed the disclosure considerations addressed in the Guidance. In this Client …

Blue Sky Banter Podcast: Donald Langevoort on Insider Trading, Disclosure, and Disasters

By Reynolds Holding March 2, 2018 by renholding

Professor Donald Langevoort of Georgetown Law speaks with Reynolds Holding about how two duties — the obligation to disclose or abstain from trading on material  information and the duty to reveal corporate secrets — evolved from the Second Circuit’s Texas …

Cleary Discusses 2017 Developments in Securities and M&A Litigation

By Jared Gerber, Abena Mainoo, Amanda Ravich, Vanessa C. Richardson and Gregory N. Wolfe February 20, 2018 by charlesbluesky

The trend of increased securities class action filings in federal courts continued from 2016 to 2017.^[1] Federal court filings of class actions related to M&A transactions again contributed to the increase.^[2] Foreign issuers remained frequent targets of federal …

How Shareholder Litigation Affects Firm Disclosure

By Audra Boone, Eliezer Fich and Thomas Griffin February 14, 2018 by renholding

Litigation allows shareholders to seek remedies for fiduciary breaches by managers or directors, such as when there has been a misrepresentation of financial results or illegal insider trading. Twitter, for example, faces a derivative lawsuit alleging that executives provided misleading …

What Happens When an Activist Goes on the Board?

By John C. Coffee, Jr. and Joshua R. Mitts January 29, 2018 by renholding

After over a year of work, which included the review of some 635,450 Form 8-Ks filed by 7,799 public companies from January 1, 2000, to September 30, 2016, we think we know at least one answer to the question in …