SEC Charges Lawyer in Insider Trading Ring Action

Yesterday, the Securities and Exchange Commission brought insider trading charges against Brien P. Santarlas, formerly an attorney at the international law firm Ropes & Gray, LLP. Santarlas was the tenth person charged in the investigation. Last month, the SEC brought charges Arthur J. Cutillo, a former Santerlas colleague at Ropes & Gray, and eight others.

The complaint alleges that Santarlas misappropriated confidential information about mergers from his law firm and provided the information to others who traded in the securities of the companies involved in the mergers. Santarlas received a kickback for providing the inside information. The SEC alleges that the scheme took in more than $20 million in illicit profits.

The essence of the case is that Santarlas and Cutillo breached their duties to Ropes & Gray by misappropriating confidential information about the mergers. Thus, they had duties to either refrain from trading or to disclose the confidential information. When the attorneys passed the information on to other members of the insider trading scheme, the duty to refrain or disclosed passed with the information. This is because those receiving such information allegedly knew that it was misappropriated nonpublic information.

This is a further example of the SEC’s tougher stance on allegations of insider trading.

The cases were brought in federal district court in the Southern District of New York. While Ropes & Gray is headquartered in Boston, the two attorneys worked at its New York office.

For an article about the Santarlas case please see The Boston Globe website.

About Richard Serafini

Welcome to my blog. I am an attorney and practice in the area of corporate trial work. Areas of particular emphasis are white collar defense, securities litigation, health care litigation, internal investigations, RICO, and financial litigation. I will be posting interesting developments in my areas of interest. I hope that you find this blog helpful and informative.