J.P. Morgan Analyst, Friends and Family Hit with Civil and Criminal Charges for Insider Trading

Insider trading remains a key area of interest for the SEC and DOJ.  Even though recent court decisions have scaled back – at least for the time being – those agencies’ expansive views of liability for trading on inside tips, every emerging fact pattern helps hedge fund managers understand the continually evolving insider trading doctrine.  See “Government Petition to Supreme Court for Review of Newman/Chiasson Reversal Provides Insight into Prosecutorial View of Insider Trading,” Hedge Fund Law Report, Vol. 8, No. 32 (Aug. 13, 2015).  The SEC recently filed charges against a J.P. Morgan analyst and two friends who allegedly traded on material nonpublic information regarding pending acquisitions.  The analyst, who worked in the J.P. Morgan division that advised on those acquisitions, allegedly provided information to a close friend; that friend and another friend then allegedly traded on that information, individually and through brokerage accounts of family members, reaping nearly $600,000 in illicit trading profits.  The DOJ is pursuing parallel criminal charges against all three defendants.  This article summarizes the alleged insider trading scheme, the SEC’s specific charges and the relief it is seeking.  For more on the current insider trading enforcement climate, see “Recent Cases Reduce the Impact of Newman on Insider Trading Enforcement,” Hedge Fund Law Report, Vol. 8, No. 18 (May 7, 2015).

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