SEC Charges Boyfriend and Broker With Trading on Inside Information From Girlfriend’s Computer

The SEC and FINRA have powerful tools to detect abusive trading practices, and insider trading remains a perennial target for them. The SEC recently commenced a civil enforcement action against the CCO of an international payment processing company and a stockbroker acquaintance for trading on the basis of material nonpublic information (MNPI) pertaining to public companies that were acquisition targets. Notably, the CCO obtained MNPI about the four potential transactions from the unattended computer of his live-in girlfriend, an investment bank employee who was working from home during the pandemic. The action illustrates the considerable challenges investment firms face in monitoring the conduct of their remote employees. This article details the SEC’s allegations and the parallel criminal charges. See “Risk Alert Cites Compliance Issues Regarding Advisers’ Handling of MNPI” (May 19, 2022); as well as our two-part series on insider trading regulatory and enforcement environments: “SEC Information Gathering and Enforcement” (Jul. 8, 2021); and “Appropriate Policies and Procedures” (Jul. 15, 2021).

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