At the 2025 Securities Enforcement Forum West, senior SEC officials, enforcement counsel, private practitioners, and industry experts gathered to share insights on the current direction of securities enforcement. A major focus of this year’s discussion: insider trading. Below are key takeaways from the insider trading panel’s discussion on where enforcement priorities are headed under the Atkins Commission.

1. Insider Trading Enforcement Will Ramp Up, But Narrow Down

Recent statements of SEC Commissioners and Enforcement officials have made it quite clear: insider trading enforcement is not going anywhere under the Chairman Paul Atkins administration, to be led by a soon-to-be appointed Enforcement Director. In fact, one can expect that the number of insider trading cases will stay steady or increase, though the focus of the investigations will shift and narrow. This was a unanimous sentiment from the insider trading panel.

2. Fencing In “Creative” Insider Trading Theories

Following acting Enforcement Director Sam Waldon's suggestion that "creative" enforcement actions will be reined in under the Atkins SEC ("Creativity is probably not where we want to be"), novel insider trading theories, such as "shadow trading" claims — trading in another company's shares on the basis of material nonpublic information (MNPI) learned about one’s own company —as represented by a recent biotech case, will likely be on the chopping block. To be sure, shadow trading is an aggressive theory, and one that the new Commission likely will not champion, if for no other reason than the line-drawing question: where should the SEC or the courts draw the line on the vast potential liability of shadow traders, and how far removed does an unrelated company have to be from a trader's employer to allow him to trade freely in that same industry? Expect that the Atkins-led SEC will fence in that new frontier of insider trading.

3. Reemphasis on Traditional Insider Trading Claims

On the other hand, in its return to retail, “bread and butter” enforcement touted by SEC officials, and following up on the DOJ’s Galeotti Memo’s emphasis on foreign conduct affecting U.S. victims, we can expect a heightened focus on insider trading rings, especially those located overseas. For example, the SEC senior counsel presenter on the panel discussed a recently filed case in the District of Massachusetts, in coordination with the DOJ. In that case the SEC charged a German national and a Singaporean national for participating in an international insider trading ring that involved coded and disappearing messages, cash drops, and other traditional forms of deception and fraud to gain nearly $18 million in illegal profits. The SEC counsel also pointed to a traditional insider trading case involving a biotech executive’s trading in front of negative FDA news. These traditional types of insider trading cases likely will increase. In fact, the economist on the panel stated that thus far in the new year, after the January 22, 2025, inauguration, the SEC has filed twelve insider trading actions. If extrapolated to the full year, this will be the largest insider trading count in 12 years.

4. To Be Determined: Hybrid Claims Involving Rule 10b5-1 Trading Plans

Corporate SEC enforcement practitioners will be closely tracking insider trading claims involving Rule 10b5-1 plans, which allow corporate insiders to trade securities under a forward-looking written plan when they are not aware of material nonpublic information.¹ 10b5-1 plans have gained widespread popularity among corporate insiders. For example, in 2021, the SEC reported that approximately 5,800 officers and directors at 1,600 companies traded under Rule 10b5-1 plans. Under the Gensler-led SEC, likely due to their growing popularity, the SEC and DOJ signaled that they were concerned that executives were abusing Rule 10b5-1 plans and using them as tools to engage in insider trading under the veil of statutory protections. In December 2022, the SEC adopted several amendments and new disclosure requirements, including strict blackout periods, intended to address what it perceived may be abuses in Rule 10b5-1 area.² On the Enforcement side, in June 2024 a jury convicted the former CEO of a company for allegedly engaging in an insider trading scheme in which he fraudulent used Rule 10b5-1 trading plans to trade company stock while holding MNPI. The 10b5-1 criminal insider trading case, which was filed in parallel with the SEC, was the first of its kind for DOJ.

These Rule 10b5-1 claims represent a hybrid type of insider trading action, that combines some novel, expansive, “creative” elements, but also “bread and butter” fraud elements involving abuse of corporate inside information. All in all, given the dual tensions, one can expect that 10b5-1 cases will continue, though they likely will be limited to particularly egregious cases with smoking-gun admissions from corporate insiders or fact patterns in which an insider suddenly entered into a 10b5-1 plan in front of bet-the-company corporate news. But one can also expect that harder to prove, more removed, Rule10b5-1 cases will not flourish under the Atkins SEC. It is a far more difficult task for SEC or DOJ trial counsel to prove to a jury that an executive intentionally set up or abused a 10b5-1 plan to take advantage of MNPI, than that the executive simply tipped or traded on MNPI himself or herself. There is a whole second level of intent and factual manipulation to be proven under the required standards of proof.

Regardless, given the complexity, risks, and recent attention to this issue, corporate compliance professionals would be wise to check with experienced legal counsel when creating or revising their 10b5-1 plans and internal corporate trading programs.

Conclusion

As SEC enforcement priorities shift and refocus under the Atkins Commission, insider trading investigations and litigation will remain front and center, though the scope and type of such claims will narrow. For corporate employers, retaining experienced counsel to assist in drafting and revising Rule 10b5-1 plans, and also to run internal investigations to assist companies in rooting out and self-reporting suspected fraudulent actors, is not only prudent, but essential.

See former SEC Commissioner Allison Herren Lee, Stock Trading Plans Should Prevent – Not Enable – Insider Trading: Statement on Proposed Amendments to Rule 10b5-1 (Dec. 15, 2021).

See SEC Adopts Amendments to Modernize Rule 10b5-1 Insider Trading Plans and Related Disclosures (Dec. 14, 2022).