Employees should be regularly trained in the firm’s compliance policies and procedures (including specifically with respect to insider trading).  As part of this training, ideally employees would be trained on potential “red flags” that increase the risk that an employee, and in turn, the firm, will receive material, non-public information (MNPI)/inside information.  Potential red flags will depend on the nature of the firm’s business.  Examples include:

  • information obtained first- or second-hand from corporations, their employees, or government agencies that is confidential (i.e., relates to an upcoming announcement);
  • phrases such as “you didn’t hear it from me,” “outlier on the street,” “keep it between us,” or “I may get a look in advance”; and
  • references to “a high degree of certainty/confidence” or some variation on projected confidence in advance of an upcoming public announcement.

In the UK, the FCA expects senior management to take responsibility for a regulated firm’s measures in relation to insider dealing.  Therefore, there should be sufficient training to ensure that senior managers understand the risks of insider dealing that their firm is exposed to (both through employee and client activity) and that the senior management team regularly receives management information in relation to suspected insider dealing.

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