Last week, a Bloomberg article ("Insider Traders Outside U.S. Safe From American Prisons") observed that foreign insider traders face very little chance of going to prison in the U.S. for violating federal securities laws. This is due to the fact that there are significant obstacles to bringing criminal charges against foreign defendants, including obtaining evidence and extradition, that factor into the likelihood that such defendants can be successfully brought to justice in the U.S. 

This week, however, U.S. prosecutors successfully requested and obtained the arrest of a former financial analyst named Trent Martin while he was in Hong Kong. Martin, an Australian citizen, was reportedly arrested in Hong Kong on December 22 on U.S. charges of securities fraud and conspiracy to commit securities. U.S. prosecutors allege that Martin learned non-public information about IBM's plans to acquire a company called SPSS Inc., and made illegal trading profits (albeit only about $8,000) based on this information. Martin is presently in custody in Hong Kong and will soon be flown to New York.

Prof. Peter Henning of Wayne State University told me that the Martin case represented the first extradition of an insider trader that he had heard of in the past decade or so.  Prof. Henning believed that this may be due in part to the fact that Hong Kong is usually quite cooperative with the U.S., and Martin was not a Hong Kong citizen. Prof. Henning added that 

if you know you've been identified as an insider trader, it's important to stay away from countries that are friendly to the U.S. and willing to extradite non-citizens for insider trading.  If you're careful, you can avoid facing charges, but I think Martin got sloppy and went some place where he could be grabbed and sent to the U.S.  If he'd stayed in Australia I suspect he would still be free.