Lugar de Noticias Haynes and Boone

The Feds Are on It, and Big Banks Need to Shore Up Compliance Programs
David Siegal

In the past year the government has moved aggressively to prosecute insider trading cases - from the Justice Department’s wide-sweeping wire-tap investigations of Raj Rajaratnam and the Galleon hedge fund, and of so-called “expert network” participants, to the Securities and Exchange Commission’s civil enforcement action last week against a chemist at the Food and Drug Administration for trading on confidential information concerning drug approvals.

In February, the Manhattan U.S. Attorney (whose office brought the Galleon cases) called on the United States Sentencing Commission to promulgate higher sentencing guideline ranges for defendants involved in complex insider trading enterprises, even in circumstances where defendants failed to make a profit from their trading.

The expanded use of powerful tools, ranging from wiretaps to cooperators, has made clear that protecting the integrity of the financial markets remains a top government priority. Given the current enforcement environment, financial institutions would be wise to re-examine their compliance programs and ensure that their policies and practices adequately address insider trading risk.

This is the first in a series of Haynes and Boone articles excerpted from Corporate Counsel. To view full article, click on the PDF link below.