Insider Trading
How to Get Caught Insider Trading
Purchase out of the money call options set to expire in two weeks, be an employee of the company acting as an adviser in the merger, not have any activity on that stock before, use an account in your name, exclusively use option when you have barely traded options in the account before, and quickly… » Read More
SEC Finally Catches Up With Former Deloitte Vice Chairman
Back in November, 2008, Deloitte sued its former vice chairman for trading in securities of the firm’s audit clients. The SEC has filed its case against Thomas Flanagan and included his son, Patrick Flanagan. The SEC alleged Flanagan traded in the securities of multiple Deloitte clients on the basis of inside information that he learned… » Read More
Private Investment Funds and Reporting Requirements Under the Ethics Code Rule
As I wrote about yesterday on the code of ethics for an investment adviser, one of the requirements of registering with SEC as an investment adviser is implementing a code of ethics. The most involved part of the code is the extensive reporting requirement on securities activities to the chief compliance officer. Rule 204A-1 under… » Read More
Nobody Saw It Coming? Magnetar Saw it Coming
After reading Michael Lewis’ The Big Short this weekend, it’s clear that some people saw the collapse of the residential mortgage market coming. This American Life had a story this weekend about another investor who also saw it coming: Magnetar Capital. (A magnetar is a neutron star with a magnetic field 100-1000 times stronger than… » Read More
Ethics of Congressional Stock Ownership
The Washington Post published a story using Congressman John Dinghell as an example of the ethics issues involved when you have an investor lawmaker: Dingells and GM illustrate limits of congressional conflict-of-interest rules. Kimberly Kindy and Robert E. O’Harrow Jr. use Congressman Dinghell because of his financial connection with General Motors. This connection was one… » Read More
Insider Trading Debates
Insider trading is back in the news. The SEC has shown heightened interest in prosecuting these cases, evidenced by the high-profile arrest of Galleon hedge fund manager, Raj Rajaratnam, on civil and criminal charges. One thing to keep in mind is that insider trading is not defined in the federal securities laws. The SEC has… » Read More
Insider Trading Enforcement
Either the Securities and Exchange Commission has stepped up its enforcement of insider trading or it’s doing a better job of publicizing its enforcement. Earlier this week, the SEC announced its case against Raj Rajaratnam and his New York-based hedge fund advisory firm Galleon Management LP. On September 23, they charged Reza Saleh with insider… » Read More
SEC Case Against Mark Cuban is Dismissed
The SEC alleged that Dallas Mavericks owner Mark Cuban was involved in insider trading when he sold shares in an Internet search engine company, Mamma.com Inc., after receiving confidential information about a private offering in 2004. The SEC said Cuban avoided a loss of $750,000 by selling his 600,000 shares, which represented a 6.3 percent… » Read More
SEC Implements New Compliance Program (On Itself)
After the embarrassing news that two of its attorneys are accused of insider trading, the SEC has decided to strengthen its internal compliance program to guard against inappropriate employee securities trading. “It only makes sense that we have a world-class compliance program – just as we expect from those we regulate,” said Chairman Schapiro. “The… » Read More
Insider Trading at the SEC
A report from the SEC’s Inspector General has publicized that two attorneys at the Securities and Exchange Commission are under “active” criminal investigation by the FBI for trading stocks based on inside information. Bad news for an agency that is still under fire for missing the Madoff fraud. Besides the salacious news, there are some… » Read More
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Compliance Building is published by Doug Cornelius, focusing on compliance and ethical issues for private equity real estate companies. Read more in About.
