The U.S. Securities and Exchange Commission has recently ratcheted up enforcement of insider trading cases, announcing investigations against ten people in four different cases in July. The headline-grabbing case involves a former Coinbase manager, his brother, and a friend alleging a scheme to trade the cryptocurrency ahead of announcements that crypto assets would be available for trading.
Increase In SEC Insider Trading Cases
While crypto assets and nonfungible tokens (NFTs) are currently facing a great deal of scrutiny from the SEC and the U.S. Department of Justice, there’s something more to the flurry of new charges. The SEC attributed charges in three of its four new cases to data analytics from the Market Abuse Unit’s Analysis and Detection Center that identifies suspicious trading activity. SEC Enforcement Director Gurbir Grewal noted that these new tools will help the SEC “root out misconduct and hold bad actors accountable no matter the industry or profession.”
As insider trading cases can have complex facts with targets who are intentionally hiding or destroying evidence, the SEC whistleblower plays a crucial role in helping identify and/or locating key pieces of evidence.
What Does This Mean For SEC Insider Trading Cases?
As the SEC ramps up its insider trading enforcement, we expect the agency to use analytics data to root out suspicious trading activity more aggressively. Companies that don’t extend their insider trading policies to third parties, such as consultants and contractors with access to sensitive information, may find themselves more vulnerable to insider trading allegations. Additionally, companies that fail to implement company-wide training to deter fraud may also be vulnerable.
If you become an SEC whistleblower, the process begins with a report to the agency with information that may lead to a claim. If the agency believes your claim contains information indicating that an entity under their jurisdiction broke the law, it may send it to investigators. If your claim is detailed and credible, the agency is more likely to investigate, which is why you need legal assistance from the beginning.
In some sense, whistleblowers are the flip side of the coin to data analytics because the whistleblower can confirm what the data implies and help prove that someone violated the federal securities laws. In other words, the whistleblower is the smoking gun that the SEC needs to prove that someone was trading on inside information. In other cases, the whistleblower provides the impetus the SEC needs to open an investigation and to look at the data in a new light.
SEC Whistleblowers Need Experienced Representation
If you’re considering becoming a whistleblower, particularly in the financial industry, you need an attorney with experience helping SEC whistleblowers. At Silver Law Group and the Law Firm of David R. Chase, our team has the experience to advise you on your rights and options as a whistleblower. Call us today at (800) 975-4345, or email us to set up a free consultation.