Insider trading is an area where the SEC’s efforts to use data analytics have really paid off. Over a decade ago the SEC’s Division of Enforcement formed the Analysis and Detection Center within the Division’s Market Abuse Unit’s to use data analysis software to detect suspicious trading patterns. To highlight the group’s work, on July 25, 2022, the SEC brought three insider trading cases that had been originated through the Center’s data analytics work (link here). In addition to the three cases highlighted in the release, dozens of other cases involving insider trading rings, disparate and seemingly unconnected traders, and traders repeatedly trading in front of market moving information have been uncovered by the group’s work over the years. No one knows how much insider trading is really occurring, but the government’s ability to find seemingly hidden suspicious trading should worry anyone trying to get away with it.
Source: Insider Trading – 2022 In Review – Shartsis Friese LLP
