ITSFEA – Insider Trading and Information Barriers

COS has substantial experience with the Insider Trading and Securities Fraud Enforcement Act (“ITSFEA”) including Information Barriers (Chinese Walls), employee trading procedures, watch and restricted list procedures, and related surveillance.

Prior to establishing COS, Mr. Ilario was Managing Director and Head of Compliance for Wachovia’s Global Corporate and Investment Banking Division.  In that role, Mr. Ilario was responsible for all aspects of compliance for Section 15(g) of the Exchange Act.  His responsibilities encompassed the following areas:

  • Equity and Debt Capital Markets;
  • Development of procedures and controls responsive to the Global Research Analyst Settlement including chaperoning procedures;
  • Insider trading, information barriers, and over the wall practices;
  • Supervision of the “Control Room” including use of watch and restricted lists;
  • Supervision of the firm’s “Personal Investment Policies” including procedures for pre-clearance and reviews of employee, employee related and firm trading  activities;
  • Investment banking and mergers and acquisition activities and the assessment on the inclusion or deletion of issuers on the firm’s watch and restricted lists;
  • Evaluation and remediation of conflicts of interest between investment banking, research, trading, sales, origination and syndicate;
  • Controls for sharing of information and solicitation for PIPES
  • The development of policies and procedures; and
  • Training

COS’ core competencies include capital markets, research and investment banking. These business areas are the predominant risk points for  Section 15(g) of the Exchange Act based on the nature of material nonpublic information associated with these activities.

COS has been engaged in a number of consulting engagements relating to Section 15(g) of the Exchange Act in either evaluating or developing compliance programs to comply with Section 15(g).  In each of the aforementioned engagements the scope of work included the review or development of the following:

  • Policies designed to prevent the misuse of material nonpublic information;
  • Establishment of systems for the inclusion and removal of issuers from the firm’s;
  • Watch and restricted lists and dissemination of watch lists;
  • Policies relating to information barriers including over the wall practices;
  • Personal investment policies of employee and employee related accounts;
  • Procedures and implementation of employee and firm trading reviews;
  • Training