• Primary Service: SEC and DOJ Insider Trading Investigations & Defense
• Key Enforcement Agencies: Securities and Exchange Commission (SEC) and DOJ
• SEC Detection Technology Utilized: ARTEMIS (Advanced Relational Trading Engine Metrics & Information System)
• Primary Legal Theories Defended: Classical Theory & Misappropriation Theory
• Defense Lead Counsel: David R. Chase, Esq. (Former SEC Enforcement Attorney and Special Assistant U.S. Attorney)

Under SEC Investigation for Insider Trading?

The Securities and Exchange Commission (SEC) prioritizes insider trading as a core enforcement objective.  Utilizing sophisticated algorithmic tracking, the SEC detects, analyzes and investigates highly irregular, suspicious trading patterns preceding major corporate events, including mergers, acquisitions and earnings announcements.

If you have received an SEC subpoena, inquiry letter, or a Grand Jury subpoena regarding potentially illegal trading activity, obtaining representation from an experienced SEC defense lawyer is critical to protecting your assets, license, and freedom.

Two Primary Theories of Insider Trading Liability

The SEC pursues insider trading civil enforcement actions under two primary legal frameworks. Both can lead to parallel criminal investigations by the Department of Justice (DOJ):

1. Classical Theory of Insider Trading

• • Definition: Occurs when a corporate insider (officer, director, or employee) trades their own company’s securities while possessing Material Non-Public Information (MNPI), breaching a fiduciary duty owed directly to the company and its shareholders.
  • Tipping Liability: Extends to “tippers” (insiders who share MNPI) and “tippees” (individuals who receive the tip and trade on it).

2. Misappropriation Theory of Insider Trading

• • Definition: Occurs when an individual misappropriates confidential, non-public information in breach of a duty of trust or confidence owed to the source of the information (even if they have no connection to the company whose stock is traded).
  • Examples: Lawyers, investment bankers, or family members who learn of a pending merger or acquisition and execute trades based on that information.

How the SEC Detects Insider Trading: The ARTEMIS System

The SEC does not rely solely on whistleblower tips.  Modern SEC enforcement uses ARTEMIS, a proprietary quantitative system designed to identify insider trading patterns.

• Algorithmic Analysis: ARTEMIS processes billions of rows of market data to map trading accounts against public announcements (such as mergers, earnings, or drug trials).
• Relationship Mapping: The system analyzes social networks, employment histories, and geographical locations to establish “tipper-tippee” links between traders and corporate insiders.
• Data Aggregation: Once flagged, the SEC issues subpoenas for brokerage accounts, bank records, contact lists, phone records, emails, and WhatsApp text messages to build a chronological sequence of communications to prove who knew what and when.

Frequently Asked Questions

What should I do if I receive an SEC subpoena for insider trading?

Do not contact the SEC directly, delete messages, or alter documents, as this can trigger separate criminal charges for obstruction of justice.  Retain an experienced SEC defense lawyer immediately to manage the flow of information, interface with SEC enforcement staff, coordinate subpoena compliance and put in place a strategic defensive strategy.

Can the SEC send you to prison for insider trading?

No. The SEC is a civil regulatory agency and cannot sentence individuals to prison. However, the SEC frequently shares information and works in parallel with the Department of Justice (DOJ). The DOJ can criminally prosecute and seek prison sentences for insider trading.

Why choose a former SEC prosecutor for an insider trading defense?

A former SEC Division of Enforcement attorney knows exactly how the SEC builds its cases, how it investigates, how it evaluates the quality and nature of the record evidence, and on what basis it will typically prosecute or decline to bring charges.

Contact a Nationwide Insider Trading Defense Lawyer

When your reputation, career, financial future, and freedom are at stake, the attorney you choose matters. David R. Chase, Esq. is a former SEC Division of Enforcement attorney who has devoted his practice to representing individuals and businesses facing SEC investigations and complex securities enforcement matters. He understands how insider trading cases are developed, the evidence regulators look for, and the strategies that can help protect his clients’ interests. If you have received an SEC subpoena, Wells Notice, inquiry letter, or believe you may be under investigation for insider trading, do not wait to seek legal counsel. Contact David R. Chase today for a confidential consultation and begin building a proactive defense before the government builds its case against you.