Herrick, Feinstein LLP
October 2008
Authors: Irwin M. Latner, Steven D. Feldman, Aismara J. Abreu
Pssst…. The New York Attorney General's Office is doing it. So is the Securities and Exchange Commission, and even the FBI. They are all looking into market manipulation through false rumors and short selling, particularly by hedge funds and other large, non-public investors. The danger to you is that if an employee trades on or passes along a rumor, it may run afoul of the rules against market manipulation or insider trading, leaving your company—and yourself—facing scrutiny and possible liability.
With the criminal and regulatory authorities under pressure to hold persons accountable for infractions contributing to the current financial crisis, now is a good time to take steps to make sure you stay out of trouble. Below, we examine the "rumor sweep" and offer practical points on doing business in this environment.
TAGLaw's New York member firm Herrick, Feinstein LLP, has published an analysis of this issue. It can be reached by clicking here.
