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This week a couple of news blurbs caught my eye, so I figured I'd summarize them in today's blog. The first involves LinkedIn's CEO, the second involves another insider trading case (along with a link to a great perspective article on how to defend against insider trading). Keep reading for full details.
The CEO's Donation of Stock Trend Continues
Continuing a recent trend of returning stock to employees, LinkedIn's CEO has declined his 2016 stock award, which is estimated to have represented approximately $14 million in value, requesting that the board instead donate it to the employee pool of stock. It's widely speculated that the move was intended to boost employee morale after recent stock woes, but regardless of whether or not that's the case, the action puts a gold star next to a CEO's name for not having his cake and eating it too.
Another Insider Tipping Case
Earlier this week, the SEC announced that they had settled administrative cases against 5 individuals charged with illegal insider trading of GSI stock in advance of its April 2014 acquisition by eBay. Since that time, a number of individuals have been the subject of SEC investigations for insider trading related to the acquisition. In this most recent investigation of the 5 individuals, the wife of a GSI insider confided in her friend about the upcoming acquisition. The SEC says that the friend then breached the trust of her confider and purchased GSI stock. She also tipped off 3 others who also then purchased stock and tipped off one additional person. We've heard this type of tale before in many different ways, but the underlying message is the same: don't assume inside information shared in confidence will stay that way, and to those who do pass along information, the SEC is catching on - relentlessly and quickly. This acquisition occurred nearly 2 years ago and we are still hearing about related SEC investigations.
Tips to Defend Against Insider Trading
A recent DLA Piper publication titled "Defending Against Insider Trading Claims" takes an in-depth look at what makes up an insider trading claim. The article also explores some recent developments in insider trading litigation and shares tips on how defend against claims of insider trading. Stock Plan Administrators live in the realm of either having access to company inside information, or working closely with those who have access to that information. Of key interest are emerging issues around "tipping" (as in passing along a tip to someone else about company inside information), including:
"What constitutes a personal benefit in a tipping chain case is perhaps the most significant current legal issue in insider trading law. Historically, the personal benefit requirement had a relatively low threshold, but lately it has been the subject of much scrutiny."
It's an interesting article worth the read to find out more.
Is an Educated Guess Material Nonpublic Information?
Last year, a Special Committee of the Board of Directors of Equifax announced that it ha...Read More
Charitable Donations of Stock
We’re into fall already, and before we know it the end of the year will be upon us. This upcoming period of time is a busy one for stock administration professionals. In the mix of activity that...Read More
Here are the results to my random questions in last week's blog entry.
Terminated Employees &...Read More
The Supreme Court and Insider Trading
Earlier this year I blogged about the fact that insider trading isn't technically illegal. It sounds far fetched, but it's true. There isn't a law on the books that specifically defines insider ...Read More
Insider Trading Isn't Illegal?
I think it's safe to say that if you work in this industry, you're familiar with the concept of insider trading. What do we know? You can't trade in a company's stock based on material non-publi...Read More