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Investigation Targeting CEO for Insider Trading Dropped


Our client, a highly successful CEO, first learned that he was the target of an insider trading probe when FBI agents appeared at his office and requested that he speak with them. Wisely, he politely refused to be interviewed and immediately engaged our firm.


We had a very good working relationship with the special agent leading the investigation, so our first step was to arrange a meeting during which agents identified the individual trades that they thought were problematic and explained their theory of the case.

Next, we did a thorough debrief of our client and learned about his educational background, professional biography, experience investing and trading, investment advisors, both past and present, and his thinking when he executed the trades at issue. We instructed our client to provide us with a long list of trading confirmations, brokerage account statements, communications with advisors, and information he relied upon when making the trades at issue. We carefully reviewed the documents provided by our client, summarized his history of investing and trading, learned about his investment objectives and risk tolerance, interviewed various witnesses and re-interviewed our client.

As a result of our investigative work, we were able to show that the trades at issue were entirely consistent with our client’s trading history, consistent with his risk tolerance, and based on information fully available to the public. Further, we were able to show that our client had no relationship to the company whose shares were traded and neither possessed nor had access to material non-public information related to this company.

It helped that our case did not have any of the red flags that prosecutors and agents typically view as evidence of criminal intent. All of the trades at issue were made in accounts that were in our client’s name, and there was no evidence that our client attempted to conceal the trade by making them in accounts of friends, family members or business entities. Also, our client did not use leverage, like options or margin trading that were inconsistent with his prior trading activity.

We scheduled a follow-up meeting with the lead special agent and presented our case.


The government declined prosecution.