Close

Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

Get updates on Compliance Week offerings, including new features, databases, research, and other resources, along with announcements of upcoming Webcasts, conferences, seminars, CPE/CLE opportunities and more.

Published every Thursday, Compliance Week Europe offers a condensed summary of risk, audit, and compliance news either originating in Europe, or of special interest to European compliance professionals. This newsletter will follow developments by the European Commission, as well as those of national governments across the region, or any U.S.-based news that might have consequence across the Atlantic. Frequency: weekly; Thursday a.m.

A fresh edition of Compliance Week delivered via e-mail and online every Tuesday morning, relentlessly focused on the disclosure, reporting and compliance requirements of our 25,000+ paying subscribers.

Published every Friday, Compliance Weekend was launched at the behest of subscribers, and offers a quick Plain English review of the week's key developments. We hope you enjoy this supplement to Compliance Week's Tuesday edition.

SEC Files Latest Familial Betrayal Case ('Counseling Req’d’)

Bruce Carton | February 3, 2010

On Monday, the SEC filed an insider trading case against Bruce A. Macdonald, the husband of the VP of Human Resources for a company called Memry. After a careful review, I am placing it in the Guarded category ("Counseling Required") on Enforcement Action's Familial Betrayal Advisory System.

The SEC alleges that Mr. Macdonald traded in Memry's common stock prior to the announcement on June 24, 2008 that an Italian public company called SAES would acquire Memry, profiting by over $25,000. The SEC's complaint claims that his wife was intimately involved in the due diligence process at Memry and regularly provided Macdonald with updates as to the progress of the company's efforts to be acquired, including the names of the final three bidders. She further advised him that Memry had imposed a trading blackout. The SEC charges that without telling his wife, Macdonald purchased shares of Memry common stock while in possession of the material. nonpublic information she had provided to him.

Based on our Familial Betrayal Advisory System precedents, this case belongs in the Guarded category. As I similarly stated when discussing another Guarded case, SEC v. Goodman, the Macdonald case simply does not reach the level of outrage required to rise to the level of Elevated (”Clothes Thrown Out Window”). Cf. SEC v. Edelman ("Elevated" case involving express caution from girlfriend not to trade, a supposed agreement not to do so, and a post-betrayal break-up).

In Macdonald, the betrayal merely involved alleged "trading behind the wife's back," with no further cautions or promises. Plus, the wife was not sued and appears to have kept her job.

To recap, the full list now looks like this:

Severe ("Hell Hath No Fury"): SEC v. Devlin
High ("Restraining Order"): SEC v. Stummer
Elevated ("Clothes Thrown Out the Window"): SEC v. Edelman
Guarded ("Counseling Required"): SEC v. Goodman; SEC v. Rocklage, SEC v. Macdonald
Low ("Someday We'll Laugh About It"): SEC v. Melton, SEC v. Gangavarapu