Overheard at the Airport: Material, Non-Public Information

I was recently in a business lounge at the airport in Atlanta, and was amazed to be bombarded by executives on their cell phones loudly conducting business.

Sitting within earshot, I learned that a large manufacturer (I knew which one it was because the person speaking about it was wearing a company-branded polo shirt) just won a major contract, and a company in the healthcare industry is preparing for layoffs.

When “Working in Public” Becomes an Insider Trading Policy Violation

If you were a stock trader, competitor or investor, would you think this is "material, non-public information?" If an employee from the M&A group told his broker this same information at a party, his bosses would be livid. (The SEC might be interested too!)

I am sure if you asked these executives they would tell you that they clearly understand the insider trading restrictions and the laws on "tipping." But you wouldn't know it to listen to them in public places.

(Read our related blog post: “Insider Trading and the Return of Organizational Culpability”)

Public Conversations About Business Always Hold Risk

Many executives think they are "working hard" by taking meetings during their down time at the airport—and they may be. However, they may also be unwittingly exposing themselves and their company to serious risk.

Hopefully these executives’ companies have training and policies that clearly prohibit this type of sharing of material, non-public information. At a minimum, executives should be retrained on these policies. If they don’t receive training and follow up they may become candidates for disciplinary action, termination—or even an SEC investigation.

Leverage Effective Policies and Training

The next time you are in the airport, on a plane, in a restaurant or waiting in line for coffee, remember the person sitting next to you may be from the SEC, a competitor or a day trader who, thanks to overhearing your conversation, has just won the information lottery. 

When’s the last time you updated your policies around insider training, or trained your employees—particularly those who frequently travel—on your policies?

For more on increasing the effectiveness of your organization's policies, access our free "Definitive Guide to Policy Management".

Chat with a solutions expert to learn how you can take your compliance program to the next level of maturity.

U.K. Commission Says “No” to Bounties for Whistleblowers

The United Kingdom’s Parliament has been considering offering whistleblower bounties similar to those offered under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act. A commission formed by the Bank of England and the UK Financial Conduct Authority spent time with U.S. regulators to investigate the benefits and the drawbacks of this type of legislation. The commission’s recommendation back to Parliament? A resounding no.

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