Tuesday, March 25, 2014

More on Recent Law Firm Insider Trading Allegation

The Wall Street Journal comments on the recent allegation of insider trading linked to a prestigious M&A law firm: "Latest Insider-Trading Case Highlights Law Firms' Risks" [again, google news link for alternative access]--
  • "Clients rely on big law firms to safeguard all manner of secrets, from intellectual property to confidential information about big-ticket mergers. But a handful of high-profile insider trading schemes—including one revealed this week that allegedly turned on tips from an employee at New York law firm Simpson Thacher & Bartlett LLP—highlight the internal risks firms face at a time when sensitive information can be accessed with just a few keystrokes."
  • "'Your employees are your highest risk," said Linn Freedman, a partner at Nixon Peabody LLP and head of the firm's privacy and data protection group, who isn't involved in the latest case."
  • "Thirty years ago, confidential files would have been kept in locked cabinets or conference rooms. Now they are stored electronically, often on firmwide networks where lawyers can access documents from offices around the globe."
  • "Simpson Thacher declined to comment for this article. 'We have strong internal controls in place and will review our systems and procedures to determine if there are ways in which they could be further strengthened,' the firm said in a statement on Wednesday."
  • "'Some of the firms are very sophisticated and have considered the insider threat and have dealt with access control accordingly,' said Eric Friedberg, an executive chairman at Stroz Friedberg, a computer forensics and investigations firm that has consulted on these issues with a number of firms. 'Some haven't.'
  • "Locking down information can run counter to the culture at many law firms, where attorneys are accustomed to collaborating on work. Extra layers of security can slow things down, especially when new lawyers are added to a team and need to get up to speed quickly."

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