No tipping, no stealing says the SEC

Companies have a duty to supervise illegal insider trading, so be sure to have a written, easily accessible, up-to-date policy against it

Trading on the basis of material, non-public information is illegal, and everyone knows it. Less obvious is the importance of insiders advising their spouses and other household members that they also cannot trade on the basis of material, non-public information they may obtain from the insider. For the company insider, however, this conversation can make all the difference. I’ll explain why in this piece and also provide some best practice reminders.

Consider the husband of the Informatica senior tax director. He observed his wife's unusual behavior—working during vacation—and overheard telephone calls made while he drove with his wife to Reno for vacation. He gleaned from all of this that Informatica Corp. was about to miss its earnings. He could have limited his activities to being warmly supportive of his wife's work. Instead, he shorted the stock. When the earnings miss was announced and the stock price fell, the husband achieved a profit of $140,000.

Priya Cherian Huskins

Priya Cherian Huskins, Esq., is senior vice president of Woodfruff, Sawyer and Company. She can be reached at

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