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ARTICLE · 02 SEPTEMBER 2024

The MNPI Is Coming From Inside The House

K&L Gates
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On 26 August 2024, the SEC settled charges against an SEC-registered adviser for policies and procedures failures related to the misuse of material nonpublic information (MNPI)...

United StatesFinance and Banking
Pablo Man
Pablo Man
Lance Dial
Lance Dial

On 26 August 2024, the SEC settled charges against an SEC-registered adviser for policies and procedures failures related to the misuse of material nonpublic information (MNPI) concerning its trading of collateralized loan obligations (CLOs). The adviser paid a US$1.8 million penalty.

According to the SEC's order, the adviser managed CLOs and traded the tranches of CLOs it managed as well as tranches of third-party CLOs. In connection with managing CLOs, the adviser also often participated in ad hoc lender groups or creditors' committees. Through the adviser's participation in these ad hoc groups, it received confidential information about issuers. On one occasion, the adviser sold tranches of a CLO while in possession of confidential information concerning the borrowers whose loans were included in the CLO.

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