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Sheppard Mullin's Nota Bene

Dec 12, 2018

The rules surrounding insider trading and securities violations are extensive and can be complicated. In order to determine if an executive selling or buying stock in their own company or if a company member trading on information provided to them, either directly or indirectly, is acting appropriately, it’s important to become familiar with the securities rules.

Joining me on the podcast to shed light on this topic is Sarah Aberg, an attorney in Sheppard Mullin’s New York office. Sarah’s practice encompasses securities regulation, compliance, and litigation as well as internal investigations and white collar defense.

What We Discuss in this Episode:

  • Who is considered an “insider” for insider trading purposes?
  • The two key statutes to be aware of when it comes to securities fraud law
  • How does a court determine if a person is engaged in insider trading?
  • Why is there a restraint on executives trading on information that has not been disclosed to the public? What effect does that have on the market?
  • Do insider trading rules only apply to public companies or do they apply to private companies as well?
  • When a tippee receives insider information and acts on it, should he/she be liable for insider trading? How is that determination made by the court?
  • What is 18 U.S. Code Section 1348 and how does it allow for criminal violations of insider trading rules?
  • Along with knowing federal securities fraud statutes, it’s also important to be familiar with state statutes
  • What happened in the Equifax data breach and what can executives learn from the incident?
  • How can companies prevent and control for insider trading?
  • What are short swings and how do they affect an insider’s ability to buy or sell shares within a certain time period?
  • What are Rule 10b5-1 plans and how do they protect insiders?

Resources Mentioned:

Dirks v. SEC (1983) 

United States v. Newman (2014) 

United States v. Martoma (2018) 

Salman v. United States (2016) 

SEC Rule 10b-5 

Contact Information:

Sarah’s Sheppard Mulling attorney profile 

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This podcast is for informational and educational purposes only. It is not to be construed as legal advice specific to your circumstances. If you need help with any legal matter, be sure to consult with an attorney regarding your specific needs.