Why "The Next Big Insider Trading Case Won’t Look Anything Like This"

The next big insider-trading case won’t look anything like this

Federal prosecutors’ indictment of 30 white-shoe lawyers and their associates, alleging more than a decade of insider trading on corporate mergers, is both juicy and quaint.

Savor it. The next big insider-trading case will look nothing like this one. […]

The next version will be tougher to catch and harder to prosecute. Disappearing encrypted messages and prediction-market bets tied to crypto wallets will replace options trading in Caribbean brokerage accounts. Well-timed trades by members of Congress or family members of administration officials will make it harder to get excited about a bumbling netherworld of law-school roommates.

The legal arguments will get fuzzier, too: The alleged mastermind of this ring, a lawyer who worked at big law firms including Latham & Watkins and Sidley Austin, obviously had a duty to keep his clients’ M&A plans a secret. Jeff Bezos’ stepson does not. When you sign a confidentiality letter and then your brother’s hairstylist buys call options on the target company, the indictment writes itself. But when the arena expands from stocks to anything-you-can-wager-on, the definition of inside information gets slippery, enforcement becomes legal whack-a-mole, and the edge goes to whoever moves fastest into the regulatory gaps.

Trump pardon recipients face congressional investigation over “pay-to-play” questions

Senate and House Democrats have launched an investigation into whether pardons and commutations issued by President Trump were driven by “pay-to-play dynamics,” according to letters obtained by CBS News.

Among the pardons being probed by lawmakers are those granted to cryptocurrency billionaire Changpeng Zhao, who pleaded guilty to money laundering; nursing home operator Joseph Schwartz, who was convicted of tax crimes; and entrepreneur Trevor Milton, sentenced to four years in prison in 2023 after being convicted of lying to investors. […]

Because Democrats are in the minority in both the House and the Senate, they lack subpoena power and can only request cooperation from the pardon recipients. But this unusual pipeline for clemency will likely be a top oversight area for Democrats should they take back majorities in either chamber of Congress in the midterm elections this year. That would give them the authority to compel documents on clemency and other areas of oversight.

Big Law’s Alleged M&A Insider Traders Switched Firms With Ease

US charges that three M&A lawyers exploited client secrets for financial gain raise questions as to how they got hired at seven different Big Law firms over the course of their alleged crime spree.

One of the three, Nicolo Nourafchan, worked at Sidley Austin, Latham & Watkins and Goodwin Procter between 2013 and 2023, federal indictments allege. After four years at Sidley, Latham brought him on and fired him after about two years. Goodwin next gave him a job before dismissing him in a couple years.

He allegedly committed crimes at all three firms. Neither the indictments nor statements from Latham and Goodwin indicate the firms had knowledge of the alleged criminal activity. Latham and Goodwin didn’t immediately respond to requests for comment about why they fired Nourafchan.

“There’s kind of a presumption that you’re working with honest folks in the vetting process because of the other higher powers outside of an employer who have stronger investigatory tools and more incentives to catch this stuff,” said Mathew Brown, a Washington DC-based legal recruiter. “A little skepticism about asking folks hard questions might be warranted going forward.”

The allegations highlight how several large law firms can be dragged into wide-reaching white collar criminal investigations by a few bad actors. Big Law attorneys frequently change firms in today’s hiring market, and if they’ve been involved in illegal activity, recruiters say, it’s not always easy to filter them out.

U.S. Audit Watchdog Should Rescind Its Independence Rules, SEC Official Says

The U.S. audit watchdog should rescind its rules around conflicts of interest for auditors and their clients and follow the Securities and Exchange Commission’s rules, which the securities regulator may change, an SEC official said.

The SEC plans to weigh revising auditor independence rules over the next year, starting with releasing informal, nonbinding guidance based on companies’ recurring questions, Chief Accountant Kurt Hohl said backstage at a conference Thursday.

That could be followed by the SEC updating the rules to consider more complex issues, such as the effect of companies’ use of artificial intelligence agents in their financial reports on auditor independence, he said.

Included in these broader plans is the potential end of separate independence rules from the Public Company Accounting Oversight Board, which the SEC oversees.

Is $WLFI an Unregistered Security?

The Justin Sun settlement underscores the incoherence of this posture. In March 2026, the SEC announced a proposed settlement of its long-running case against Sun for $10 million, while dismissing the outstanding charges against him. The case, originally brought in 2023, alleged that Sun and his companies offered and sold unregistered securities in the form of TRX and BTT and manipulated the secondary market for TRX through wash trading. The proposed settlement did not require Sun to admit wrongdoing. But to impose the penalty, the SEC still had to assert jurisdiction, meaning the Commission effectively maintained that, at least at the relevant time, TRX had been offered and sold as part of an investment contract.

That creates an awkward problem for the Trump SEC. The agency has spent the past year arguing, explicitly and implicitly, that most crypto tokens fall outside the securities laws and that the prior administration’s crypto enforcement program was overbroad. Yet when it came time to settle with Sun, who has business ties to World Liberty and is now suing the company, the SEC still relied on the very securities-law logic it has otherwise tried to minimize.

This matters for $WLFI because the Sun settlement shows that the SEC still knows how to apply Howey when it chooses to. It can still recognize that a token may be offered and sold as part of an investment contract, even if the token is not itself a stock or bond. It can still impose penalties for unregistered crypto securities offerings. What it has not shown is a willingness to apply that same analysis to a token project financially tied to the president of the United States.

That creates a basic enforcement-integrity question: if this were any other crypto issuer, would the SEC be investigating?