SEC Insider Trading Crackdowns Continue Under New Administration

Dmitriy Smirnov

August 4, 2025

Firm News

Despite early speculation that regulatory enforcement might soften under the Trump administration, the Securities and Exchange Commission (SEC) has demonstrated a continued—and in some respects, intensified—commitment to insider trading enforcement in 2025. The agency reported a record number of enforcement actions in the first quarter of FY 2025, including several high-profile insider trading cases that signal a clear message: policing market integrity remains a bipartisan priority.

Recent actions against corporate insiders, tippees, and even family members of executives underscore the SEC’s aggressive stance. These developments suggest that the current Commission is not only maintaining momentum from prior years but also expanding its reach into novel theories and complex trading schemes.

SEC Intensifies Insider Trading Enforcement: A Closer Look at Recent Developments

In its Fiscal Year 2024 report, the SEC announced a record-breaking $8.2 billion in financial remedies, underscoring its focus on high-impact cases—even as the total number of actions declined. Insider trading remains a central priority, with the SEC continuing to work in tandem with the Department of Justice (DOJ) to pursue both civil and criminal charges.

Understanding Insider Trading: Legal Foundations

Insider trading typically involves trading securities based on confidential information in violation of a duty of trust. The SEC enforces these violations under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit fraudulent conduct in securities transactions. There are two primary legal theories guide enforcement, the “Classical Theory” and “Misappropriation Theory.” The Classical Theory applies when corporate insiders trade their own company’s securities using nonpublic information, as was the case in Chiarella v. United States, 445 U.S. 222 (1980). The Misappropriation Theory, as the name suggests, targets the misuse or theft of confidential information obtained through a relationship of trust, even if the perpetrator is not an insider of the traded company, as in United States v. O’Hagan, 521 U.S. 642 (1997).

Expanding Boundaries: The Rise of “Shadow Trading”

As we discussed here, the SEC is now pursuing cases under the “shadow trading” theory, which extends liability to trades made in economically linked companies based on insider knowledge. In a landmark case, Matthew Panuwat was found liable for trading options in Incyte Corporation after learning of Pfizer’s acquisition of his employer, Medivation. The jury concluded that Panuwat misappropriated confidential information, resulting in over $100,000 in illicit profits. 

Likewise, in SEC v. Bechtolsheim, the Commission charged Andreas Bechtolsheim, the former chairman of Arista Networks for trading options in another related company, Acacia, based on insider knowledge of an impending acquisition. He was fined nearly $1 million and barred from serving as a public company officer for five years. This appears to be only the second example of an SEC enforcement action for insider trading under the “shadow trading” theory.

2025 Enforcement Highlights

Notably, under the current administration, the SEC has continued to pursue insider trading cases with vigor. These are recent examples:

• Alfred V. Tobia, Jr. and Elizabeth Lee (January 2025): The SEC charged Tobia, the former president and CIO of one public company and a board member of another, and his sister-in-law, Elizabeth Lee, with insider trading that generated over $428,000 in illegal profits. Both defendants agreed to pay more than $1.36 million to settle the charges.
• Kenneth Miccio (January 2025): The SEC announced settled charges against Miccio for illegally trading securities of Maxar Technologies, Inc. based on material nonpublic information that originated from a financial industry analyst.
• Robert Brian Thompson (July 2025): Thompson, a former employee of a Federal Reserve Bank, was charged with insider trading based on confidential information he accessed through his position.

Consequences of Insider Trading

These cases reflect a broader trend: the SEC is not retreating from complex or novel enforcement theories, even under a more conservative administration.

Importantly, insider trading can be prosecuted either civilly by the SEC or criminally by the Department of Justice (DOJ). The SEC may bring civil enforcement actions seeking monetary penalties and injunctive relief, while the DOJ may pursue criminal charges where it believes it can prove willful misconduct beyond a reasonable doubt.

Because insider trading is a scienter-based offense, violations carry significant penalties. In civil enforcement actions brought by the SEC, sanctions may include:

• Disgorgement of ill-gotten gains, plus prejudgment interest;
• Civil monetary penalties of up to three times the profits gained or losses avoided (“treble damages”); and
• Officer and director bars, among other remedies.

Where there is evidence that the conduct was willful and intended to defraud, and the government believes it can prove guilt beyond a reasonable doubt, the DOJ may pursue a criminal indictment, seeking:

• Prison sentences of up to 20 years per violation;
• Criminal fines of up to $5 million for individuals and $25 million for entities; and
• Restitution to harmed investors.

A recent example is the DOJ’s May 2025 indictment of Jonathan Whitesides, Daniel McCormick, and Brent Cranmer, who pleaded guilty to insider trading in advance of the acquisition of Kaman Corporation. Cranmer, an executive at a Kaman subsidiary, misappropriated confidential deal information and tipped his associates, who then traded call options for illicit profits exceeding $1 million. In a separate and more recent case, Federal prosecutors charged Justin Chen and Jun Zhen, employees of a private firm that serviced SEC EDGAR filings, with stealing nonpublic information about upcoming corporate disclosures. They allegedly used this information to trade in companies such as Purple Innovation Inc., Ondas Holdings Inc., SigmaTron International Inc., and Signing Day Sports Inc., generating over $1 million in illicit profit.

Strategic Legal Guidance Is Essential

As enforcement evolves, so does the complexity of defending against insider trading allegations. At Fridman Fels & Soto, PLLC, we offer strategic counsel grounded in deep regulatory experience. Whether you’re responding to an SEC subpoena, facing charges, or proactively reviewing compliance policies, our team is prepared to protect your interests.

If you receive a Wells notice, an SEC subpoena for documents or request for testimony, a FINRA 8210 or FINRA OTR, or any similar request from a state securities regulator, contact Fridman Fels & Soto, PLLC to speak with an experienced SEC defense attorney immediately to protect your rights and respond effectively.

Alejandro Soto is a former senior official with the SEC and leads Fridman Fels & Soto, PLLC’s Securities Litigation and SEC Enforcement Defense Practice Group.