Top US markets regulator probing insider trading guardrails

Source: Reuters

April 17, 2024 2:43 PM EDT Updated 30 min ago


NEW YORK, April 17 (Reuters) - The U.S. Securities and Exchange Commission is scrutinizing whether investment advisers and other firms have strong enough policies to ensure nonpublic information is not misused to gain an illegal edge in trading, a top official told Reuters.

The SEC is looking to crack down on ineffective policies and procedures as part of broader insider trading scrutiny, Gurbir Grewal, the SEC's enforcement director, said in a recent interview. "The frustration with insider trading is that sometimes the threat of jail and penalties don't prevent it," Grewal said. "So we have to emphasize the tools we have and the firms need to tighten up their policies to prevent abuse."

The SEC's efforts are aimed not just at insider trading in equity markets, but also potential use of complex financial tools including swaps or derivatives to benefit from non-public information or to mask misconduct, he said. Grewal declined to say whether the agency has or would launch an enforcement sweep to target the issue.

Under Democratic leadership, the SEC has pursued theories of insider trading seen by many as novel. The SEC this month scored a victory in a "shadow trading" case when a jury found that a former pharmaceutical company executive violated civil insider-trading law by betting on another company's stock after learning of the acquisition of his own company, Medivation Inc.

Read more: https://www.reuters.com/markets/us/top-us-markets-regulator-probing-insider-trading-guardrails-official-says-2024-04-17/