Michael Rivera and Abby Yi Examine How Remote Working Can Create Insider Trading Risks

August 26, 2019
Corporate Counsel

On August 23, Corporate Counsel published the first of a three-part series from Bass, Berry & Sims attorneys Michael Rivera and Abby Yi highlighting insider trading developments that warrant public companies to consider updating their insider trading polices and training. As the benefits of remote work options increasingly pull the workforce out of the office, companies face risks from employees removing sensitive company documents from the secure confines of their offices and company databases.

“Unprotected confidential information is susceptible to being furtively viewed and misused by outsiders for personal gain, including to commit illegal insider trading,” Michael and Abby pointed out. In fact, enforcement agencies have been steadily filing insider trading cases stemming from confidential information misappropriated from unwitting corporate insiders. This has included instances where information was usurped by persons who eavesdropped on a family member’s business call and viewed confidential documents at a friend’s house, as well as instances of individuals misusing information shared by a loved one in confidence.

Because information removed from the safety of a corporate office or database is susceptible in many ways to being taken and misused by bad actors, it is important for in-house counsel to take steps to ensure their insider trading policies and training cover this area. In particular, we recommend that in-house counsel:

  • Educate employees on the need to take precautionary measures to protect confidential information.
  • Identify risks of remote working and ensure employees understand those risks and mitigation tactics.
  • Instruct employees to secure company information in their homes so no one else can view it.
  • Remind employees of the dangers of even innocently sharing company information with trusted family members and friends.
  • Work with IT professionals to keep pace with remote work methods and fully understand the company‚Äôs risk profile.

The full article, “Insider Trading Policies and Training: Time for a Refresher?” was published by Corporate Counsel on August 23, 2019, and is available online.