backInadvertent Tipping Cases Continue Under the Current Commission
Insider trading remains a key area of focus under the current U.S. Securities and Exchange Commission (SEC), even as overall enforcement activity has decreased.1See Alec Koch, Aaron Lipson, Carmen Lawrence, Bill Johnson, Andrew Michaelson, Brian Miller & Clarissa Moliterno, SEC Enforcement Under the Current Administration: Takeaways from the FY 2025 Results and the First Six Months of FY 2026 (Apr. 16, 2026); see also Alec Koch, Aaron Lipson & Clarissa Moliterno, Parsing Trump Admin’s First 6 Months of SEC Enforcement (Sept. 12, 2025). The SEC recently released several insider trading enforcement actions involving inadvertent tips of sensitive company information.
As described in our prior installments spanning more than a decade of inadvertent tipping cases,2We are carrying on a tradition begun by the inimitable and now-retired Dixie Johnson. See Dixie L. Johnson, Aaron W. Lipson & Lauren O. Konczos, When Mentors and Loved Ones Are Dangerous: Avoid Insider Trading Charges with a 2025 New Year’s Resolution (Jan. 9, 2025); Dixie L. Johnson & Lauren O. Konczos, Working From Home? Beware Insider Trading, Tipping Risks (May 10, 2023); Dixie L. Johnson & Lauren O. Konczos, Working From Home? Stay Alert to Avoid Insider Trading or Tipping Liability! (Jan. 25, 2023); Dixie L. Johnson, Matthew B. Hanson & Lauren O. Konczos, Reviving the Holiday Gathering This Year? Avoid Adding Insider Trading Liability to the Mix. (Dec. 20, 2021); Dixie L. Johnson, Matthew B. Hanson & Kelli Gulite, Quarantine Your Sensitive Business Information to Avoid Inadvertent Tipping Liability (Apr. 10, 2020); Dixie L. Johnson, Aaron W. Lipson & Matthew B. Hanson, Stay Vigilant: The Government Shutdown Didn’t Shut Down Insider Trading Enforcement (Mar. 20, 2019); Dixie L. Johnson, Richard H. Walker & Matthew B. Hanson, Loose Lips Still Sink Ships: Inadvertent Tipping in 2017 (Dec. 21, 2017); Dixie L. Johnson, Alana L. Griffin & Matthew B. Hanson, Avoid Inadvertent Tipping This Holiday Season (Dec. 21, 2016); Dixie L. Johnson & Matthew B. Hanson, Post-Newman Reality: Investigations Involving Unwitting “Tips” to Close Friends and Relatives Will Continue (Oct. 8, 2015); Dixie L. Johnson & Matthew B. Hanson, Friends and Family: Keeping Loved Ones Safe from Insider Trading Temptations (Dec. 8, 2014); Dixie L. Johnson, Maintaining Client Confidences During the Holidays: Avoid Accidental Tipping (Dec. 23, 2013); Dixie L. Johnson & Matthew B. Hanson, Accidental Tipping: The Wrong Kind of Holiday Present for Family and Friends (Dec. 14, 2012); Dixie L. Johnson & Robert Greffenius, Topics to Avoid in Holiday Conversation: Religion? Politics? Work! (Nov. 30, 2011); Dixie L. Johnson & Robert Greffenius, Insider Trading by Friends and Family: When the SEC Alleges Tipping (Aug. 18, 2011). employees (“insiders”) with access to material nonpublic information (MNPI) continue to find themselves in situations where they unintentionally disclose or permit sensitive information to make its way to a relative, friend, or romantic partner, and for that recipient to subsequently use the information to trade. In these cases, insiders rarely intend to break the law, yet they can still face severe civil enforcement or criminal charges for insider trading violations. Short of actual liability, they can also face expensive and invasive government investigations and suffer from reputational harm and significant damage to their career, even though insiders may not be named in the SEC’s public documents.
The most recent cases, brought under the current Commission, highlight the continued risks of leaving your workspace exposed, taking a phone call without headphones, and disclosing confidential information to those with whom you feel most comfortable.
Even Small Bets Can Catch Investigators’ Attention
Two of the SEC’s recent insider trading cases involved family members who traded based on an insider’s MNPI after an insider was a bit too comfortable sharing it.
In the first case, a cousin traded based on MNPI he learned from an insider, who was part of the sales team at a biopharmaceuticals developer and worked on the marketing rollout of a drug in anticipation of its approval by the Food and Drug Administration (FDA).3Complaint, SEC v. Ryan, 1:26-cv-04724 (S.D.N.Y. June 4, 2026). The SEC’s complaint noted that they were “family members who share[d] a close personal relationship” and “communicated several times a week, sometimes multiple times a day—via text message, phone calls, and in-person meetings.” The cousin, a retired trader, began purchasing the company’s securities the same month the insider started working there. The cousin was known among his friends as the “stock guy,” and provided one friend in particular with stock tips, which led to that friend also buying the company’s stock the same month the insider began working there.
Despite the insider’s obligations to maintain confidentiality, she shared MNPI regarding the FDA’s approval with her cousin before the information became public, including over two phone calls in the two days between learning about the FDA’s approval and the public announcement. After each call, her cousin immediately purchased additional stock. The SEC’s complaint noted the admissions the cousin made during his plea allocution in a parallel criminal case,4Plea, United States v. Ryan, 1:26-cr-00117 (S.D.N.Y. Mar. 26, 2026). including: (1) the insider disclosed MNPI she was not permitted to disclose; (2) the cousin understood that the insider was not permitted to disclose that information to him; and (3) he used the MNPI to trade in the company’s securities. Similarly, the complaint noted that the insider had signed an employee confidentiality agreement when she first began her employment and had received an email from the company’s Chief Compliance Officer—a few weeks before receiving the MNPI—that reminded all employees about the company’s insider trading policy and noted specifically that the pending FDA approval was MNPI. The insider was not charged, but she was no doubt a big part of the broader investigation, given her communications with the cousin.
In total, the cousin bought approximately 16,480 shares, later selling them for approximately $9,200 in illegal profits. For that modest profit, the cousin ultimately was enjoined from violating securities laws, and ordered to pay civil monetary relief, with the amount still to be determined.5Judgment, SEC v. Ryan, 1:26-cv-04724 (S.D.N.Y. June 12, 2026). The cousin also pled guilty to one count of securities fraud in the parallel criminal action.6Information, United States v. Ryan, 1:26-cr-00117 (S.D.N.Y. Mar. 26, 2026).
Too Close for Confidential Communications
The second case involved an acquisition and an insider who worked in the target company’s legal department and lived with one of the defendants, who is a family member.7Complaint, SEC v. Elmgart, 2:26-cv-05633 (D.N.J. May 18, 2026). According to the SEC’s complaint, both the insider and family member worked remotely and “had separate workstations a few feet apart.” As a result, the family member had access to the insider’s workspace and could therefore know about the substance of the insider’s work.
Due to the pending acquisition, the insider had to work over the weekend, including participating in highly confidential video calls, and had to cancel plans with the family member. The SEC noted that the insider’s work schedule had previously only involved working normal business hours during the week; the pending acquisition required the insider to work at night and on weekends for the first time since joining the company. In great detail, the SEC’s complaint explained that, over the course of the next week, the insider had to “attend numerous video calls for work at highly unusual hours,” including at least one call that the insider took the following Sunday from the home office while the family member watched television in the adjoining living room and could therefore hear the conversation.
The next day, the family member deposited $1,000 into his brokerage account, which he had not used in almost three years, to purchase 100 out-of-the-money call options for the company’s stock. He then proceeded to buy an additional 160 call options over the next three days. After the acquisition was announced, the family member closed out his entire position by the end of the next day, which resulted in $63,050 in illicit profits. The SEC noted that the family member did not tell the insider about his purchases. When the insider later showed the family member news of the acquisition, the family member still did not disclose that he had traded. Further, “[l]ater that night, when the acquisition was discussed at a holiday dinner,” the family member again did not disclose his trades to the insider.
Unfortunately, the insider also decided to confide in a friend about the pending acquisition, and because the friend also traded, the friend was the second defendant in the SEC’s case. The complaint described that, after learning of the pending acquisition, the insider visited the friend at his apartment, called the friend, and had the friend visit the insider’s home over the weekend while working on the pending acquisition, where the friend could overhear the insider working in the home office. During and after these events, the friend attempted to, and eventually did, purchase 10,000 shares for $17,420, which after the acquisition resulted in unrealized illicit gains of $30,580. At the same holiday dinner, the friend congratulated the insider and noted that “he was aware ‘the stock went up’ in response to the acquisition,” but did not disclose his trading.
Both the family member and friend were permanently enjoined from violating securities laws.8Judgment, SEC v. Elmgart, 2:26-cv-05633 (D.N.J. May 20, 2026). The family member was ordered to pay $132,273 in disgorgement, prejudgment interest, and a civil penalty, while the friend was ordered to pay a total of $63,957. It is not clear why the insider was not charged, but we suspect investigators considered that possibility during the investigation.
Romance Cannot Survive Insider Trading
Most recently, the SEC charged a former romantic partner after he allegedly misappropriated information from the laptop of an insider who worked for a strategic communications and investor relations firm that assisted public companies with their corporate disclosures.9Complaint, SEC v. Jennings, 2:26-cv-07525 (D.N.J. June 23, 2026). In addition to detailing the insider’s relationship with her former romantic partner, the SEC’s complaint described her computer habits, including that (1) she would leave her laptop unlocked when she stepped away from it, whether that entailed going into another room or leaving the apartment; (2) she used the laptop for personal use, in addition to work, and allowed her former romantic partner to use the laptop for personal use when she was present; and (3) she provided her former romantic partner the password to the laptop and showed him the functionality of the database she used to perform her work, as he had told her he was interested in coding and database projects. This arrangement allowed the former romantic partner to trade ahead of eight corporate disclosures based on MNPI over a period of more than two-and-a-half years that resulted in approximately $2.7 million in illicit gains. In addition to the SEC’s charges against the former romantic partner for violating securities laws, as well as its request for a permanent injunction, disgorgement with prejudgment interest, and civil penalty, the former romantic partner is also the defendant in a parallel criminal action with the U.S. Attorney’s Office for the District of New Jersey.10Indictment, United States v. Jennings, 2:26-cr-00316 (D.N.J. June 23, 2026).
Sometimes the Insider Is a Mystery
Occasionally, SEC inadvertent tipping cases omit information about the insider, likely due to the insider’s—and perhaps the defendant’s—cooperation with the SEC during its investigation.
For example, in one case brought by the SEC earlier this year, the SEC’s complaint (borrowing from the required elements of insider trading law) noted that the defendant (1) owed a duty of trust and confidence to an insider, who worked at a pharmaceutical developer and was a member of a committee for a drug awaiting FDA approval; (2) misappropriated MNPI from the insider by liquidating shares he had held for more than two years in advance of the company’s announcement that the FDA had denied approval for the drug; and as a result, (3) breached his duty to the insider.11Complaint, SEC v. Suthoff, 1:26-cv-10350 (D. Mass. Jan. 26, 2026). Doing so led to the defendant avoiding losses of almost $20,000. While the complaint described how the insider had obtained the MNPI at work, it omitted how the defendant knew the insider and how the defendant had obtained the MNPI from the insider. The defendant was permanently enjoined from violating securities laws, had to pay $42,706 in disgorgement, prejudgment interest, and a civil penalty, and received a five-year officer and director bar.12Judgment, SEC v. Suthoff, 1:26-cv-10350 (D. Mass. Jan. 28, 2026).
Conclusion
These cases demonstrate that the SEC is still actively enforcing insider trading laws, even where the circumstances are less direct via inadvertent tipping. To maintain your relationships with your loved ones, we suggest not letting comfort get in the way of maintaining confidentiality; otherwise, you may find yourself being described in a public SEC document, or worse, being criminally or civilly charged with insider trading.
