October 26, 2020

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October 26, 2020

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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 © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VIII, Number 172
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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
Special Counsel

Sarah Aberg is special counsel in the White Collar Defense and Corporate Investigations Group in the firm's New York office.

Areas of Practice

Sarah's practice encompasses litigation, internal investigations and white collar defense, with a focus on financial services and securities. She has conducted multiple criminal trials and numerous internal investigations into a wide variety of allegations, including mail and wire fraud, mortgage fraud, insider trading, market manipulation, money laundering, terrorist financing, cybercrimes, and data privacy violations.  Sarah’s regulatory practice encompasses market regulation, foreign registration and disclosure requirements, supervisory procedures, and sales practices.  Sarah represents corporations, financial services companies, and associated individuals in connection with investigations and regulatory matters before the U.S. Department of Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission, FINRA, the New York Stock Exchange, the New York State Department of Financial Services, and the New York Attorney General’s Office.

212-634-3091
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