SEC's Insider Info Case Shows Perils Of Portfolio Co. Trading

By Andrew Ceresney, Julie Riewe and Jonathan Tuttle (July 2, 2020, 5:09 PM EDT) -- On May 26, private fund manager Ares Management LLC paid a $1 million penalty to settle charges brought by the U.S. Securities and Exchange Commission.

The regulator alleged that Ares failed to implement and enforce its policies and procedures designed to prevent misuse of material nonpublic information, or MNPI, while a member of its deal team sat on a portfolio company's board and while it was subject to confidentiality provisions in a loan agreement with the portfolio company.[2]

Significantly, however, the SEC brought the case even though:

All trading occurred when the portfolio company's trading window was open, suggesting at least...

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