Insider Trading Remains a Law Enforcement Priority Amid the Looming Drought in White Collar Prosecutions

This week’s unsealing in Boston of a superseding indictment charging eight defendants in an alleged insider trading ring spanning multiple continents marks the latest in a string of prosecutions and SEC enforcement actions that reveal a notable paradox: even as white collar prosecutions appear to ebb, federal authorities continue to pursue insider trading violations at least as aggressively as in prior administrations.

The Boston indictment—which charged a web of players with generating tens of millions in illicit profits over a period of years, using information obtained from multiple corporate insiders—landed on the same day as an Idaho executive pled guilty to trading ahead of a corporate acquisition by his own company. In October, two former employees of EdgarAgents.com, a filing agent, pled guilty in Brooklyn to charges that they used inside information from client filings to generate approximately $2 million in profits.  The trading itself allegedly happened earlier this year—indicating a fast-paced investigation and prosecution by prosecutors in the Eastern District of New York, operating in parallel with the SEC, which filed its own enforcement action.  In June, prosecutors in Connecticut announced the guilty plea of Ryan Squillante, the former head of equity trading at Irving Investors, a Denver-based firm, who was sentenced to two months in prison for shorting shares of multiple companies ahead of planned but unannounced secondary offerings; Squillante later settled parallel SEC charges.   And earlier this year, prosecutors in New Jersey and the SEC charged multiple defendants—including a board member of a Chinook Therapeutics and several family members and friends—with trading on inside information about that company’s $3.2 billion acquisition by Novartis in 2023, allegedly generating more than half a million in profits.  Together, these actions demonstrate that while the broader enforcement landscape may have shifted under the current administration, insider trading remains in the crosshairs of both the Department of Justice and the SEC.

Broader statistics underscore this divergence.  According to an analysis released this week by Cornerstone Research and the NYU Pollack Center for Law & Business, the SEC brought 30 percent fewer enforcement actions against public companies and subsidiaries in fiscal 2025 (ended September 30) than in fiscal 2024. While that decline is not inconsistent with prior patterns following changes in administration, the Cornerstone/NYU study noted that the vast majority of the fiscal 2025 actions were initiated before the change in administration; the number of corporate enforcement actions initiated since the new administration took over was the lowest by a new SEC administration in more than a decade.  Likewise, Bloomberg Law recently reported that the SEC brought just 91 new enforcement suits from Inauguration Day through the end of September, down from 126 actions filed during the same period in 2024.  At the same time, Bloomberg reported that nearly 33 percent of those actions under the current administration focused on offering fraud or insider trading, up from 26 percent during the same period last year.  And many of those cases have been accompanied by parallel criminal proceedings.

The Boston prosecution announced this week represents the cutting edge of insider trading enforcement.  The indictment charges a former Merrill Lynch banker and seven co-conspirators from Singapore, Germany, and the United Arab Emirates with operating a sprawling international network that operated over a period of years. The case showcases how modern insider trading schemes have adopted sophisticated techniques to evade law enforcement, including through the use of encrypted messaging platforms, burner phones, swapped SIM cards, coded language, and a web of international accounts.  It likewise demonstrates how prosecutors are keeping pace, forging relationships across jurisdictions to dismantle even the most complex insider trading networks. In the Boston case, the Justice Department’s Office of International Affairs secured extradition from Switzerland, while Singaporean authorities provisionally arrested another defendant, who is fighting extradition.

But if that case pushes boundaries in terms of scope and complexity, it is likely to be an outlier.  More traditional prosecutions will almost certainly constitute the lion’s share of the matters regulators and law enforcement authorities pursue.  Indeed, the other insider trading case this week—the guilty plea by Michael Smith, former president and chief operating officer of an Idaho-based company—was as classic as they come:  the defendant purchased shares of his own company, through the account of someone with whom he had “had a close personal relationship,” ahead of his own company’s acquisition.  

Since taking office, SEC Chairman Paul Atkins has articulated an enforcement philosophy that prioritizes traditional securities fraud, and victim-driven matters, over boundary-pushing legal theories.  In his first SEC Town Hall in May, shortly after being sworn in, Atkins pledged that “investor protection”—which he defined as “to hold accountable those who lie, cheat, and steal”—would be “the cornerstone” of the SEC’s mission under his leadership.  (He was more pointed in a recent interview with the Financial Times: “If you lie, cheat or steal [from] your investors and steal their money like Bernie Madoff, we’ll leave you naked, homeless and without wheels.”)  That said, while insider trading is often viewed as a victimless crime, its position as a core enforcement focus is clear.  The upshot: whatever the broader trends in white collar enforcement, those who trade on material nonpublic information—or are accused of doing so—continue to face significant legal jeopardy.