How trades get noticed
Securities fraud investigations, and insider trading inquiries in particular, often start with data rather than a complaint. Exchanges and FINRA run surveillance that flags well-timed trading around major announcements, and the SEC can obtain detailed trading records from brokers. Investigators then look for links between the traders and the people who had the information, using phone records, messages, social connections, and calendars. A profitable trade ahead of news is not a crime by itself; the central issues usually involve what the person knew, where the information came from, and whether a duty of confidentiality was breached. Criminal cases are usually brought by federal prosecutors, often alongside a civil SEC case, though New York state prosecutors can also bring them.
Missteps to avoid right now
Do not delete messages, trade records, or apps, and do not ask anyone else to, because destroying evidence can become a separate and more serious problem than the trade itself. Avoid talking with the friend, relative, or colleague who may be the source of the information, even to compare memories, since those conversations can look like coordination. Consider pausing trading in the same company until you have advice. Gather your brokerage statements and anything showing your reasons for the trade, such as earlier investments in the company or a long-standing plan, and share them with your lawyer rather than writing up your own account.
Your role and the first decisions
People in these inquiries can be witnesses, subjects, or targets, and the role can change as the investigation develops. A request for a voluntary interview, an SEC subpoena, and a visit from FBI agents each call for a different response, and none should be handled without counsel. We look at the timeline of the trades, the information available to you at the time, and the relationships investigators are likely to examine. If your employer's compliance department is involved, we consider how an internal review may run alongside the government's. From there we decide with you whether and how to engage.
