Young Law Group Announces Initiative Prosecuting Alleged Insider Trader Abuses

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In keeping with ramped up enforcement by federal prosecutors and news reports of alleged insider trading, Young Law Group is launching an initiative ferreting out alleged insider trading in securities, derivatives, swaps and other risk instruments.

Young Law Group, a leader in whistleblower representation, announces an initiative aimed at ferreting out alleged insider trading in securities, derivatives, swaps and other risk instruments.

This YLG initiative responds to beefed up enforcement cracking down on insider trading by the Securities and Exchange Commission and by U.S. Attorneys and the Financial Industry Regulatory Authority (FINRA) according to an April 8, New York Law Journal analysis and to news reports based on whistleblower Mark Rosenblum’s complaint alleging insider trading enabled by Thomson Reuters in connection with the University of Michigan Index of Consumer Sentiment (MCSI).

Thomson Reuters provides a sneak preview of extremely time-sensitive, market moving information to preferred, so-called “ultra-low latency distribution,” subscribers based on monthly metrics of consumer sentiment generated by the University of Michigan Survey Research Center at 9:54:58:00, a full two seconds prior to distributing the market moving metric to other subscribers at 9:55:00 and five minutes prior to public, monthly distribution at 10:00 AM, CNBC reported June 12, 2012 in “Thomson Reuters Gives Elite Traders Early Advantage.”

Two seconds constitutes enough time for preferred subscribers to execute high speed trades of securities, which are sensitive to consumer sentiment, with sophisticated algorithms, CNBC reports.

NASDAQ had announced acquisition of Thomson Reuters ten days prior to CNBC report and nearly two months after the whistleblower complaint, Rosenblum v. Thomson Reuters (Markets) LLC, Judge Scheindlin, U.S. District Court for the Southern District of New York, 13 CV 2219, April 4, 2013.

As a rule, economists contend that market moving information should be released to all market participants at the same time, CNBC reports.

Thomson Reuters asserts that it disclosed the tiered system with two second lead time for preferred subscribers in 2011, and Thomson Reuters pays the University approximately $1,000,000/year to support the index, CNBC reports.

The preferential, tiered rankings came to light after now former Thomson Reuter employee Mark Rosenblum sued the firm on the reasonable belief that Thomson Reuter’s actions violate Dodd Frank provisions prohibiting insider trading. Rosenblum disclosed the existence of the Thomson Reuter’s tiers to the FBI and was fired, court papers indicate.

Rosenblum disclosed his concerns with Thomson Reuters management, notified the FBI of the existence of the Thomson Reuter’s two second, “potentially market moving information” and was fired with no severance nor any accrued vacation days, he alleges in his complaint.

“Mark Rosenblum is to be commended for speaking up against alleged insider trading. Whistleblowers like Rosenblum can now employ the reasonable belief standard, which enables financial professionals to assert their professional ethics and standards questioning the legality of a preferential, sneak preview, insider trading system,” Eric L. Young said.

Beyond federal law, insider trading violates professional standards. For instance, in its Code of Ethics and Standards of Professional Conduct, the Certified Financial Institute states that “members…who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information….[and] must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.”

“Insider trading makes a mockery of transparent markets. It’s heartening that the SEC, FINRA and hard working U.S. Attorneys are now prosecuting insider trading vigorously. Otherwise, investors have few, if any, protections from insiders with preferred access to market moving information. And, we’re eager to do our part to protect financial professionals, who enable the system to self-correct by challenging illegal business practices,” Eric L. Young said.

Young Law Group specializes in representing whistleblowers ("relators") throughout the United States and internationally in SEC, False Claims Act, and IRS whistleblower lawsuits. U.S. Whistleblower laws allow private individuals to bring claims on behalf of the taxpayers against companies and individuals that are defrauding the government and to recover funds on the government's behalf. Whistleblowers may be entitled to 15 percent to 30 percent of civil recoveries resulting from a whistleblower lawsuit.

Contact: Young Law Group by email by clicking on Mr. Young's name on the right or calling (800) 590-4116.

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Eric L. Young

James J. McEldrew, III
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