The SEC takes insider trading extremely seriously and has historically made it a key enforcement priority. With a zero tolerance approach, the SEC has demonstrated its willingness to pursue not only insider trading cases involving relatively small dollar amounts involving non-securities licensed individuals, but also to commit substantial resources when investigating and prosecuting Wall Street Titans. When I was a SEC enforcement attorney, I conducted numerous SEC insider trading investigations, and have successfully defended dozens in private practice as a SEC insider trading lawyer. The SEC’s obsession with insider trading will not, in my opinion, end anytime soon.
If you are under investigation for insider trading and have been contacted by the SEC, usually at first by a telephone call out of the blue (affectionately known as an “ambush call”), and thereafter via a SEC Subpoena, it is of the upmost importance that you understand: (1) the current state of the law on insider trading, (2) how the SEC investigates, prosecutes and settles its insider trading cases, (3) if you have legal exposure as a result of your conduct, and (4) your legal and strategic options, including cooperation with the SEC. It is therefore critical that you immediately engage a knowledgeable and experienced SEC insider trading attorney who will counsel you, protect your legal rights and reputation, and devise a strategy in an attempt to defeat the insider trading investigation.
At the core of an SEC insider trading investigation is the quest by the SEC to determine what you knew, when you knew it and how you knew it before you either purchased or sold a particular security. In other words, the SEC wants to know if you traded on material, non-public information (for example, did you know of the company’s plan to merge before it was publicly released and, if so, did you trade and/or tip others with that information). In pursuit of this knowledge, the SEC will issue you a subpoena seeking your brokerage account statements, bank records, telephone and cell records, social media communications, text messages (including such applications as WhatsApp), calendars (outlook entries), and any documents evidencing the basis for your decision to buy or sell. The SEC will also obtain documents and testimony from individuals who possessed the inside, material non-public information and attempt to determine what communications, including financial transactions, they may have had with you.
After documents are produced to the SEC and reviewed, the SEC will typically seek to take your testimony, which is the process by which SEC counsel will ask you questions under oath about the reasons for your trading, your relationships with those who possessed inside information and your communications with others who traded. At this stage of the insider trading investigation, whether you testify substantively and answer the SEC’s questions on the record, take the Fifth or seek to cooperate in the hopes of cutting a favorable deal is a vital decision that must be made with a knowledgeable SEC insider trading lawyer.
SEC insider trading investigation are high-stake propositions, involving the risk of having to pay the SEC significant monetary penalties, the return of trading profits with interest, injunctions, potential loss of licenses and real damage to reputations. Moreover, the SEC on ocassion referrs its insider trading cases to the criminal authorities for prosecution. Given these potential serious consequences, you should engage David R. Chase, a seasoned SEC defense lawyer, immediately after you are contacted by the SEC to ensure that your legal rights are protected and that you maximize the chances of avoiding prosecution. Mr. Chase, an experienced SEC insider trading lawyer, has favorably resolved many SEC insider trading cases for his clients over the years.