The SEC filed insider trading charges against an investment bank VP who worked in the risk management department and received material nonpublic information as part of his duties to provide technical information to support internal committees. According to the SEC, the defendant learned inside information about a pending going-private transaction when he was copied on an email intended for the firm’s Debt Loan Committee and those that supported its functioning. The SEC alleges that the risk management VP used undisclosed personal brokerage accounts in his name and his wife’s name to trade call options and stock in the target, thereby collecting over $40,000 in ill-gotten gains. In addition to the SEC’s civil charges, the U.S. Attorney has filed a parallel criminal action.
OUR TAKE: It hurts all compli-pros when a risk management professional misuses his position and access to engage in unlawful activity. Who can you trust? Presumably nobody, which is why nobody should be exempt from oversight and testing.