Philadelphia partners Mary Hansen and William Carr wrote an article titled, "Employer Liability for Insider Trading," in the Review of the Securities & Commodities Regulation. The recent highly publicized insider trading cases involving hedge funds and their senior executives unmistakably signal a shift by federal regulators toward holding employers liable for the alleged bad acts of their employees. Given this renewed focus on the enforcement of insider trading policies, procedures, and Regulation FD, brokerage firms, investments advisers, and public issuers should be acutely aware of the SEC's statutory weapons for imposing employer liability for securities violations. The authors examine significant SEC enforcement actions and related criminal actions to illustrate the importance of implementing robust compliance systems and conclude with a discussion of best practices to safeguard against such liability.
Source: The Review of Securities & Commodities Regulation