SEC Announces Consent Judgment against IT Professional for Insider Trading (with Lofchie Comment)

The SEC announced that the U.S. District Court for the Southern District of New York entered a consent judgment against a senior information technology professional for insider trading.

According to an SEC Complaint filed against him in September 2014, the individual had access to non-public information stored in the firm's client-related databases and garnered more than $300,000 in illicit profits using this information to trade in advance of merger announcements involving the firm's clients.

The SEC found that the individual used accounts in his own name to engage in insider trading at first, but shifted course when a lawyer at his firm was charged by the SEC and criminal authorities in an entirely separate insider-trading scheme. After immediately liquidating the remaining securities that were purchased on the basis of non-public information, the individual continued his insider trading in a brokerage account held in the name of a relative living in Russia.

Lofchie Comment: Firms should be particularly mindful of their IT department employees' access to information. They should consider whether it is possible to limit the access of tech insiders to inside information and, when this is not possible, to take other prophylactic measures, including additional screening and training.

See: SEC Litigation Release.