In its seemingly endless pursuit to track down and prosecute insider traders who profit from their use of material, nonpublic information — particularly those fiduciaries who are legally entrusted with the inside information (lawyers, accountants and investment bankers, known as “Gatekeepers”) — the Securities and Exchange Commission charged an attorney for illegal insider trading based upon confidential client information he accessed while employed at an international law firm.
In its complaint, the SEC alleged that in 2023, during a one-year stint at the law firm, the lawyer wrongfully obtained confidential data concerning the law firm’s services for a biopharmaceutical client. The SEC further claimed in its filing that on May 9, 2023, the day prior to a deal being announced publicly, the insider trading lawyer bought in excess of 10,000 shares of the target biopharmaceutical company, and then sold them the next day once the news was announced. As a result of his alleged fraudulent insider trading, he reaped a profit of approximately $42,000.00, per the SEC’s allegations.
To make matters worse – much worse — the SEC also claimed in its insider trading enforcement action that the lawyer traded in shares of several other companies, all of which were law firm’s clients, in close temporal proximity to major announcements by those companies, strongly suggesting that he may have engaged in a pattern of illegal insider trading.
Given that the lawyer is a gatekeeper, a fiduciary entrusted to safeguard a client’s material, non-public information, and that he may have engaged in multiple instances of insider trading, it is no surprise that the SEC referred him to the US Attorney’s Office for the District of Columbia for criminal prosecution — he was then criminally charged. Typically, a gatekeeper who engages in illegal insider trading runs the very real risk of a criminal referral by the SEC, but evidence that the lawyer may have also engaged in a pattern of this illegal conduct, evidently proved to be more than sufficient to trigger the criminal referral.
As is the norm in SEC insider trading cases, the insider trading- based charges consisted of alleged violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, in addition to monetary and non-monetary relief, including an injunction, disgorgement with prejudgment interest, and civil penalties.
Illegal Insider Trading Defense Lawyer
David Chase, Esq. is an insider trading lawyer and principal of the Law Firm of David R. Chase, a law firm focused on representing those under SEC insider trading investigations nationally and internationally. Contact David toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com for a free and confidential consultation, and you can also visit the firm’s website at: www.davidchaselaw.com to learn more about David and his extensive SEC insider trading defense experience.
