Rogue employee’s insider trading likely won’t incriminate firm
KWIKA partner David Swift was quoted by Law360 in Pete Brush’s article on the arrest of a clerk in the international law firm Simpson Thacher & Bartlett LLP for insider trading.
That the firm itself is not considered culpable is small comfort to Simpson Thacher since its bread and butter is private equity and corporate merger transactions, where clients need the certainty of secrecy. The clerk charged with the crime was fired as soon as charges were brought, and the firm says it knew nothing of his activities, a claim bolstered by the Securities and Exchange Commission’s own complaint in which it characterized Simpson Thacher as a victim.
David commented on the issue of whether clients might decide to sue: “It’s seems unlikely a plaintiff’s firm would pursue this. Proving causation likely would be a difficult task.”
David added that the firm could potentially be charged with civil liability if its compliance standards were found to be deficient and deemed a factor leading to the offense.