In 2005, I wrote a memo to all Public Company Employees About to Engage in Insider Trading in Advance of "Big News" About Their Companies. The subject of my memo was "Your Future (or Lack Thereof)."

I wrote the memo hoping that perhaps I could maybe stop a person or two from joining the list of defendants in SEC insider trading cases. These defendants were, and still are, frequently employees of publicly-traded companies who get advance notice of earnings news or other big news concerning their companies and buy/sell the company's stock prior to the announcement of that news. I tried to make the case as clearly as I could that this practice was just stupid--"Darwin Award-level stupidity," I said.

Despite my best efforts, public company employees just went on learning about mergers and acquisitions and earning surprises at work that were poised to make their company's stock jump or sink, and then trading on that news. And then getting sued by the SEC, of course. In January 2009 I dusted off and recirculated the memo after yet another employee -- a manager at Freescale Semiconductor, Inc. -- was sued by the SEC after he allegedly worked on the due diligence for Freescale's acquisition of SigmaTel and then bought stock in SigmaTel prior to the announcement. 

Still, the beat went on. Today the SEC charged a former legal assistant on Semitool Inc. with insider trading on confidential information about the 2009 acquisition of the company. The SEC alleges that the legal assistant learned nonpublic information about Applied Materials' imminent acquisition of Semitool as part of her job, and then tipped her father about the acquisition (who allegedly traded on the information and along with others made profits of more than $67,000). Marc Fagel, Director of the SEC's San Francisco Regional Office, stated that the legal assistant "exploited her access to confidential merger and acquisition information to illicitly enrich herself and her family. As a member of a legal department entrusted with sensitive deal documents, she had a duty to safeguard that information, not trade on it.”

So, one more time, I offer you public company employees this memo that explains why insider trading in your own company's stock simply is not going to work out for you, and why it may even lead to the SEC calling your Gramma. Tweet it. Post it on your Wall. Send it to your shady friends down the hall. As I say in the memo, "This is an IQ test and every one of you employees (or directors) of public companies whose names show up on this list are failing.  Just stop it."

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