O’Melveny Worldwide

Fortune: The SEC is Pushing the Limits of Insider Trading Enforcement

February 8, 2022

O’Melveny partner Jorge deNeve and counsel Jamie Quinn co-authored this article outlining the SEC’s latest tactics to combat insider trading and securities fraud, including the “shadow training” theory. “The SEC’s aggressive enforcement of insider trading has succeeded in expanding liability in some areas—but not all,” the authors wrote. “Defendants should be prepared to aggressively challenge novel legal theories and their factual underpinnings. In future ‘shadow trading’ cases, defendants should challenge any allegations that the information obtained by the outsider is material to the traded company.” The authors also noted that defendants should be prepared against the SEC’s use of statistical data and cited SEC v. Clark and Wright as an example saying that, “the value of such statistical evidence can be negated by evidence that contextualizes the communications and highlights a lack of evidence that nonpublic company information was disclosed.”

Fortune subscribers can read the full article here.