Katherine Goldstein Quoted on DOJ, SEC Enforcement Actions

Program on Corporate Compliance and Enforcement at New York University School of Law solicited reactions from several leading former federal prosecutors and white collar defense attorneys on criminal and civil insider trading charges recently brought by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) against an executive for his alleged fraudulent misuse of a 10b5-1 trading plan. This type of plan, according to the NYU article, allows corporate insiders to pre-schedule sales of company shares in order to avoid accusations of insider trading.

In her response, “The Government Takes Aim at 10b5-1 Plans,” Akin white collar defense & government investigations partner Katie Goldstein, who served as Chief of the Securities and Commodities Fraud Task Force in the U.S. Attorney’s Office for the Southern District of New York, said of this matter, “In one sense, the SEC and DOJ have charged a straightforward insider trading case, having alleged that the defendant, a public company executive, was in possession of material, non-public information before he made profitable trades in his company’s stock.”

She noted, however, that, in other ways, the charges are significant: “First, the government is clearly taking aim at trading pursuant to 10b5-1 plans, which market participants have relied on for 20 years. In addition, the government has repeatedly touted its use of data analytics in bringing this case, which means that there are more like it on the way. Finally, it seems clear that the SEC is going to be taking a hard look at 10b5-1 plans that pre-date the changes to the Rule, including whether those plans had a cooling off period, even though plans that pre-date the amendments were not required to have one.”

Katie was one of the authors on a recent Akin alert covering DOJ and SEC’s increased scrutiny on Rule 10b5-1 plans. Read it here.