A hedge fund advisory firm and a senior research analyst agreed to settle SEC charges that they failed to detect insider trading conducted by one of the firm's employees.
Specifically, the SEC Order found that: (i) the firm and its supervisor failed to reasonably supervise an employee who procured material nonpublic information from an insider at a public company, and (ii) the firm willfully violated the requirement that it establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information consistent with the nature of its business.
The SEC elaborated that the employee later was charged, along with his source, as part of the SEC's broader investigation into expert networks and the trading activities of hedge funds. The two individuals were also charged by criminal authorities and since have received prison sentences.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
