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What is insider trading and MNPI?
Insider trading is when you buy and sell securities based on confidential material information that is inaccessible to the general public. Material non-public information (MNPI), is confidential financial information about a publicly traded company or security that can influence an investor’s willingness to buy or sell certain assets, like stocks, bonds, options, ETFs and even crypto and NFTs.
In the US, insider trading is prohibited by Section 10(b) of the 1934 Exchange Act and SEC Rule 10b-5. Individuals suspected of violating these laws are investigated by the SEC and FBI, and may be subject to civil enforcement actions or criminal prosecution. Individuals convicted of insider trading are subject to imprisonment and will be required to pay penalties and disgorgement of profits.
Does my Business need an Insider Trading/MNPI policy?
Yes! The SEC’s rules and regulations mandate that companies establish procedures to ensure compliance with insider trading laws, which can include guidelines for trading windows, pre-clearance for trades by insiders, and disclosure requirements. Companies are also expected to provide clear information to employees about their obligations regarding trading in company securities. While the SEC requirements do not apply to private companies, your suppliers and vendors will expect you to have such policies in place as insider trading investigations are costly and bring unwanted publicity.
How we can help
With years of experience investigating and prosecuting SEC insider trading cases, we can design an insider trading policy that is fit-for-purpose. We can also conduct training programs to ensure that your employees and contractors do not run afoul of these rules.
We offer a practical, cost-effective compliance & risk solutions to ensure your business does not run afoul of US, UK and EU compliance laws.
