SEC Fines Former Compliance Attorney for Insider Trading

The US District Court for the District of New Jersey granted an SEC Motion for Summary Judgment against a former company compliance attorney for insider trading. 

In the Opinion, the District Court found that the attorney had "access to and obtained [the company's] draft SEC filings and earnings materials" before the company disclosed its quarterly and yearly financial results to the public. The District Court said that the attorney was subject to company-imposed "blackout periods" that prohibited him access to material nonpublic information for engaging in trades involving company stock. The District Court found that the attorney used the material nonpublic information "to his own use by executing trades involving [company] stock..., in violation of the [the company's] Insider Trading Policy and during the [company] blackout periods." The District Court stated that the attorney's actions were "especially egregious given that he was the chair of the [company's] Disclosure Committee, and his very job was to ensure compliance with securities laws and applicable trading restrictions."

In a related press release, the SEC noted that the attorney previously "pled guilty to federal criminal charges for securities fraud in a parallel criminal action before the District Court of New Jersey."

The District Court found that the attorney violated the antifraud provisions of SEA Section 10(b) ("Regulation of the Use of manipulative and deceptive devices"), SEA Rule 10b-5 ("Employment of manipulative and deceptive devices"), and SEA Section 17(a) ("Fraudulent Interstate Transactions").  The Court ordered the attorney to pay a $1,147,440 penalty–treble his profit obtained or loss avoided.