SEC Action Emphasizes Importance of Safeguarding Analyst Reports and Opinions From Improper Disclosure

On October 12, 2016, the SEC announced yet another insider trading settlement, charging Deutsche Bank with failing to maintain proper safeguards over material nonpublic information generated by the bank’s research analysts from 2012 through 2014; improperly publishing a research report that inaccurately reflected its legal analyst’s views; and failing to maintain appropriate electronic records to deliver to regulators during their investigation. This article outlines Deutsche Bank’s alleged misconduct, the SEC’s charges and the terms of the SEC settlement order, as well as insight into the broader circumstances surrounding this settlement. For analysis of the implications of sharing research by hedge fund managers, see “Selective Dissemination of Research Through Surveys, Trade Ideas Platforms, Huddles and Desk Research: What Are the Implications for Hedge Funds?” (Aug. 2, 2012). For practical steps that hedge fund managers can take to avoid enforcement actions related to insider trading, see our three-part series: “Four Insider Trading Enforcement Trends With Direct Impact on Hedge Fund Trading Strategies” (Nov. 13, 2014); “Eight Actions That Hedge Fund Managers Can Take to Avoid Insider Trading Violations” (Nov. 20, 2014); and “Six Compliance Requirements and Four Enforcement Themes for Private Fund Advisers” (Jan. 8, 2015). For coverage of another recent SEC action targeting insider trading, see “Alleging Dozens of Violations, SEC Charges Leon Cooperman and Omega Advisors With Insider Trading and Failing to Make Regulatory Filings” (Sep. 29, 2016).

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