July 16, 2018

July 16, 2018

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You Might Be an Inside Trader If: Insider Trading and Data Breaches Part II

As we wrote yesterday, the CIO of Equifax is currently facing civil and criminal liability following trading he made after his employer suffered a major cybersecurity breach. As we indicated in our prior blog post, the SEC has filed a complaint alleging liability because he independently figured out that his employer was the victim of a breach and traded on that information.

This case is important not only because of the reasons we reported yesterday, but also because it illustrates the need for public companies to closely consider their procedures for responding to a breach, including their processes for issuing trading blackouts during investigation of the breach, and how and when to communicate with employees who are not part the core incident response team, as even careful planning cannot prevent inadvertent discovery of material non-public information.

Putting it into Practice:  If you are a public company, consider revising your insider trading policies or offering additional employee training to address instances in which employees may obtain (whether directly or indirectly) non-public information regarding a potential data breach impacting the company or its customers.

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Kari Rollins Intellectual Property Lawyer Sheppard
Partner

Kari M. Rollins is a partner in the Intellectual Property Practice Group in the firm's New York office.

Areas of Practice

Ms. Rollins focuses her practice on privacy and complex commercial litigation matters. She has successfully represented clients in the financial services, audit and accounting, food services, retail, and fashion industries before state and federal courts, as well as in front of state attorneys general, federal regulators, and U.S. and international commercial arbitration forums....

212.634.3077
Sarah Aberg Government Contracts Attorney Sheppard Mullin Law Firm New York
Associate

Sarah Aberg is an associate in the Government Contracts, Investigations & International Trade Practice Group in the firm's New York office.

Areas of Practice

Ms. Aberg’s practice encompasses securities regulation, compliance, and litigation as well as internal investigations and white-collar defense. She frequently represents broker-dealers and associated individuals who are the focus of SEC, FINRA, and other regulatory investigations. She has conducted numerous internal investigations into a wide variety of allegations, including insider trading, unauthorized trading, and other retail brokerage sales practice violations. Ms. Aberg has also represented banks, broker-dealers, securities professionals and individuals in connection with investigations and inquiries by the Department of Justice, FINRA, and the New York Attorney General’s and District Attorney’s Offices.

Experience

Representative Experience 

  • The Private Bank division of a global investment bank in connection with ongoing FINRA, SEC and state securities regulatory inquiries and investigations.
  • Senior mortgage finance professionals in RMBS-related investigations and litigations.
  • Financial advisors in connection with SEC investigation into Forex trading platform.
  • A securities broker in DOJ/SEC investigation regarding bond trading practices.
  • A federal savings bank charged with mortgage and securities fraud by the Manhattan District Attorney.
  • An international retailer in a federal civil asset forfeiture action concerning structuring allegations.
  • Skaarup Shipping International in successfully defeating a $50 million prejudgment attachment in the District of Connecticut.
  • CIT Financial Services, Inc. in a New Jersey arbitration over breach of contract.
  • General Dynamics Corp. in filings with the US. Maritime Administration.

Practices

  • Government Contracts, Investigations & International Trade
  • Litigation
  • White Collar Defense and Corporate Investigations
212-634-3091