Insider Trading

Insider trading law is more complex than it is often portrayed. Not every trade made on the basis of non-public information is unlawful — liability depends on who possessed the information, how it was obtained, and what duties were owed. However, the government frequently pursues these cases aggressively, and the consequences of a conviction or even an unresolved investigation can be severe: criminal penalties, civil sanctions, industry bars, and lasting reputational damage.

Ford O’Brien Landy LLP defends individuals and entities facing insider trading allegations in both criminal proceedings and SEC enforcement actions. Our clients have included hedge fund managers, executives, brokers, and traders across equities markets and, increasingly, crypto and digital asset markets — where insider trading enforcement has expanded significantly in recent years. For a broader discussion of our digital asset regulatory and compliance work, see our Digital Asset Compliance and Regulatory Defense page.

Prediction markets are the newest front in insider trading enforcement. Platforms such as Kalshi and Polymarket allow users to trade contracts on the outcomes of real-world events, including elections, sporting events, corporate announcements, and government actions. Regulators have made clear that insider trading rules apply here too: trading event contracts on the basis of confidential information obtained in breach of a duty to its source can violate the Commodity Exchange Act, and both the CFTC and federal prosecutors have begun bringing civil and criminal cases. Because the people with advance knowledge of these outcomes are often government employees, campaign staff, athletes, and corporate employees rather than traditional market professionals, many may not realize they face any exposure. The platforms themselves also monitor trading and refer suspicious activity to regulators, so an investigation can begin with little warning.

Sports betting has become another focus of enforcement. Since the Supreme Court cleared the way for states to legalize sports wagering in 2018, betting has spread rapidly, but the law governing bets placed on inside information has not kept pace. Congress has not defined what counts as nonpublic information in this context, and only a handful of states specifically prohibit wagering on it. Federal prosecutors have moved to fill that gap, bringing wire fraud charges in high-profile cases involving NBA and MLB players and the bettors who allegedly used their information. These prosecutions raise difficult and largely untested questions: what makes information “nonpublic,” whether a bettor’s acceptance of a sportsbook’s terms of service can support a fraud charge, and how far liability can extend to people who learn information secondhand or through their own observations. And because many sports contracts now also trade on prediction markets, the same conduct may draw scrutiny from the CFTC as well. Members of the Firm analyzed these issues in an article published in December 2025 on Law360 titled “NBA, MLB Betting Indictments: Slam Dunks Or Strikeouts?” The article can be found at this link: ** NBA, MLB Betting Indictments: Slam Dunks or Strikeouts? — Law360

Insider trading cases frequently begin long before charges are filed. The SEC or DOJ will often investigate for months or years, seeking testimony and documents before making a charging decision. How a target responds during that investigative phase — what is said, what is produced, and what positions are taken — can be as consequential as the defense at trial. We counsel clients from the earliest stages, coordinating criminal and civil strategy to protect their interests at every turn.

Contact us to learn how we can help.

** Reprinted with permission from Law360.