Federal Securities Law Source

Archives: Insider Trading

Subscribe to Insider Trading RSS Feed

SEC v. Cuban: Court Rules That SEC Must Produce Non-Privileged Items From A Related Investigative File and Orders Both Parties to Produce Privilege Logs

In a February 10, 2012 Memorandum Opinion and Order, Chief Judge Sidney Fitzwater ruled on the motions to compel pending in the SEC’s lawsuit against Mark Cuban. Although these disputes in the insider trading case are largely procedural, they are significant in that the Court considered whether the SEC would be required to produce certain … Continue Reading

Portfolio Manager at Whitman Capital, LLC Charged in Insider Trading Cases Related to the Galleon Management Cases

On Friday, February 10, 2012, the U.S. Attorney for the Southern District of New York and the SEC announced charges against Douglas F. Whitman, the head portfolio manager at Whitman Capital, LLC, related to alleged insider trading. It is claimed that Mr. Whitman’s friend and neighbor, Roomy Khan, provided Mr. Whitman with the same information … Continue Reading

Corporate Defendant in “Perfect Hedge” Case Settles Insider Trading Charges With SEC and Enters Into a Non-Prosecution Agreement With U.S. Attorney

On Monday, January 23, 2012, the SEC announced that Diamondback Capital Management LLC ("Diamondback"), the Stamford, Connecticut-based hedge fund named as a defendant in the SEC’s insider trading case last week (as discussed here), has agreed to settle charges with the Commission. Diamondback will pay more than $9 million as part of the settlement, which … Continue Reading

“Perfect Hedge” – Criminal and Civil Insider Trading Charges Brought Against Seven Investment Professionals

Today, federal prosecutors and the SEC named seven fund managers and analysts as defendants in an insider trading scheme based on nonpublic information about Dell’s quarterly earnings and similar inside information regarding Nvidia Corporation. The U.S. Attorney called the trading in Dell shares the "largest insider trading scheme involving single stock charged to date." Three of … Continue Reading

Two Interesting Insider Trading Cases Against Former CEOs – One Involving Shares of a Privately Held Company, the Other Involving a Polygraph Test

Two unique insider trading cases have received a bit of attention recently. One case, brought on December 12, 2011 against a company and its former CEO, alleged that they defrauded shareholders by buying back stock at severely undervalued stock prices – at a time when the company was privately held. The second, brought on January … Continue Reading

Enforcement Director Robert Khuzami Testifies Before Two Congressional Committees Regarding Insider Trading Issues

The Director of the SEC’s Division of Enforcement appeared before two Congressional Committees in the last week to testify about the Commission’s recent work in the area of insider trading. The testimony raised two interesting topics: (1) a review of the "new initiatives" instituted by the SEC to combat insider trading; and (2) information on … Continue Reading

SEC v. Mark Cuban: The Discovery Fight Continues – This Time the SEC Moves to Compel Information From Mr. Cuban Regarding Events During the Investigation

On Tuesday, November 22, 2011, the SEC struck the latest blow in its long-standing dispute with Mark Cuban by filing a Motion to Compel, asking the Court to order Mr. Cuban to produce a privilege log of documents (from the period the SEC was investigating him) which were withheld on privilege grounds. According to the … Continue Reading

Judge Rakoff Continues His Busy Week By Entering a $92 Million Judgment Against Raj Rajaratnam in Civil Case

On Tuesday, November 8, 2011, Judge Jed Rakoff issued an Opinion and Order and entered a final Judgment against Raj Rajaratnam, bringing a close to the SEC’s first civil case against the former head of Galleon Management. Mr. Rajaratnam, who was previously convicted of insider trading charges (as discussed here) and sentenced to twelve years … Continue Reading

Rajat Gupta Will Get His Day in Court … Twice

On Wednesday, October 26, 2011, both the SEC and the U.S. Attorney’s Office for the Southern District of New York filed charges against Rajat Gupta, the former Managing Director of McKinsey & Company and board member at Goldman Sachs and Procter & Gamble. Mr. Gupta, who previously argued that an Administrative Proceeding brought by the … Continue Reading

Recent Articles Discuss Two Trends in Securities Enforcement: Increasing Sentences in Insider Trading Cases and the Possible End of An Era in Backdated Options Cases

A pair of articles appeared this week that traced trends in particular areas of securities enforcement. The Wall Street Journal presented data showing an increase in the length of sentences in insider trading cases over the last eighteen years. A second article which appeared in Corporate Counsel suggested that the SEC’s settlement of a case … Continue Reading

SEC Obtains A Default Judgment For $34.5 Million Against a Former Moody’s Analyst In Its Galleon Case

On Wednesday, August 24, the SEC announced its latest result in its case relating to Galleon Management, this time obtaining a default judgment against Deep Shah, a former lodging industry analyst at Moody’s. The Court entered a permanent injunction from future violations of Section 10(b) and Rules 10b-5, and disgorgement, prejudgment interest and civil penalty … Continue Reading

SEC Dismisses Insider Trading Administrative Proceeding Against Rajat Gupta, But Reserves Right To Sue Him In Federal Court

The SEC and Rajat Gupta have agreed to settle their dispute regarding the forum in which they should litigate the allegations of insider trading by the former Goldman Sachs director by dismissing the pending actions against each other. Specifically, the SEC has dismissed its Administrative Proceeding against Mr. Gupta alleging insider trading and the parties … Continue Reading

SEC Brings Fraud Case Against Biopharmaceutical Company, Three Other Companies and Four Executives For Misleading Investors About Sole Product and Insider Trading

On Monday, August 1, 2011, the SEC filed suit against eight defendants for making false statements in public filings regarding the status of the human clinical trials for the drug SF-1019 by Argyll Biotechnologies LLC. The statements did not disclose that the Food and Drug Administration had issued clinical holds on testing for the drug, … Continue Reading

Texas Court Strikes Mark Cuban’s Affirmative Defense of Unclean Hands in Case Against the SEC, Ruling That The Defense Is Permitted Only In Limited Circumstances

On Monday, July 18, 2011, a Federal Judge in Texas, Sidney Fitzwater, granted a Motion to Strike by the SEC in its case against Mark Cuban, the owner of the Dallas Mavericks, eliminating his affirmative defense of "unclean hands" in the Commission’s case against him. Notably, although it did strike the defense in Mr. Cuban’s … Continue Reading

Consultant Who Exploited Friendships With Financial Personnel at Public Companies Is Convicted For Insider Trading

On Monday, a federal jury convicted a consultant at an expert networking firm, Winifred Jiau, of one count of conspiracy and one count of securities fraud for selling inside information she obtained through social relationships with sources from the finance departments at publicly traded companies. According to the U.S. Attorney, "Wini Jiau gave new meaning … Continue Reading