Navigating Client through SEC Investigation

The Securities and Exchange Commission (SEC) sued our high-net worth client and several other foreign traders for insider trading and possible collusion in U.S. securities manipulation. The SEC had limited evidence that any of the defendants were in possession of actual material inside information. Rather, the SEC alleged that these defendants had engaged in suspicious trading patterns of contracts for difference (CFDs – used by foreign traders so that they do not actually need to own U.S. stock) around the time that the underlying corporation made major announcements. The SEC relied upon the fact that the same group of defendants had made similar successful trades around the time of major announcements for other corporations. The District Court of New Jersey recently granted our motion to dismiss and the SEC abandoned the matter. The Court ruled that the defendants’ trades in relating to corporations other than the one whose CFDs were at issue in the suit were not indicative of insider trading with respect to the CFDs at issue in the lawsuit.


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