Insider Trading Moves "Front Burner"

Law doesn't just happen. Extrajudicial forces exert enormous influence on the course and conduct of legal matters, be they civil or criminal. Indeed, in the media age, the actions of plaintiffs, defendants, prosecutors and regulators are inevitably intertwined with what is considered important, meaningful or otherwise "hot" at a given moment in time.

In the white collar criminal context, therefore, what gets investigated and who gets charged -- with what and when -- are to a large extent dependent on what's considered important from a public standpoint. Equal application of the law it is not.

Which brings us to insider trading. In the past several weeks, we're seeing an enormous uptick in insider trading stories, including related to Deloitte & Touche, BP, the Wyly Brothers in Texas and Mark Cuban (owner of the Dallas Mavericks, whom I've blogged about in the past, here, here and here). To say nothing of the Galleon case which has dominated the legal news space for months (for the latest, see this Wall Street Journal article).

So have insiders been illegally trading more over the past several months, compared with years past? Likely not... rather, it's pretty reasonable to suggest the uptick is related directly to the renewed urgency felt by prosecutors and regulators -- which, of course, is itself stoked by renewed public interest in corporate fraud and malfeasance.

It's as simple as this: Public officials know which side their bread is buttered on. And if the public craves enhanced enforcement on the financial front... give 'em what they want. As I related in my 2009 book, In The Court of Public Opinion (ABA Books, 2009):

What's "hot" right now is one of the key variables that will influence whether a case receives media interest... We are currently working with a shareholder fraud attorney who is on CNN and CNBC twice a week regarding the cases he's involved with. In the go-go markets of the last decade, we couldn't have booked him on public access cable. No one was doing corporate malfeasance or fraud stories then. Now you can't get away from them... These days, it's all corporate malfeasance, fraud and Ponzi schemes all the time. White collar perp walks are where it's at.

Corporate lawyers, clients and PR personnel should recognize that, after a decade of mortgage fraud, financial self-dealing and purloined investments, public interest in white collar crimes that were, in the past, considered a bit "ho-hum" (if they were considered at all), have now moved to the front burner -- of prosecutorial attention, and media and other public interest.