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Regulation White Collar Crime

Government Looking Into Insider Trading By Tipping Block Trades

How the government might frame insider trading cases based on allegations of tipping before the execution of block trades in securities.

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As Congress struggles to determine whether it will finally pass a law defining insider trading, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have trained their sights on an ever-widening array of insider trading practices and theories. Recent cases have focused on the purchase and sale of material non-public information on the dark web and the use of a variation of traditional insider trading called “shadow trading.” The government is now investigating whether financial institutions have engaged in insider trading by tipping some of their clients about large, market-moving “block trades” in securities that the financial institutions are scheduled to handle for other clients. This article discusses how the government might frame insider trading cases based on allegations of tipping before the execution of block trades in securities.

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