As reported in Ars Technica, Dimitry Braverman was a senior IT professional who was a trusted employee of the well-respected Wilson Sonsini law firm. He is now headed for two years in prison after using confidential law firm data to load up on stocks and options for companies with mergers or other major transactions on the way.
Braverman, who made $305,000 in profits off the illegal transactions, pled guilty last November. The companies he traded on included retailer Gymboree, Drugstore.com, Epicor Software, Seagate Technology, software firm Dealertrack Technologies, storage company Xyratex, and pharmaceutical companies YM Biosciences and Astex Pharmaceuticals.
Braverman has agreed to pay $520,433 in reparations to the U.S. Securities and Exchange Commission, substantially more than the profits he made.
US District Judge Paul Engelmeyer said Braverman's crimes were too serious to warrant only home confinement as requested by his counsel, according to a Reuters report on the sentencing hearing. "It is important when an insider trader gets caught—and a repeated insider trader as here—that a substantial sentence is imposed," the judge said.
Engelmeyer noted that Braverman took a break from his trading in 2011 and 2012 when an associate at his law firm was caught and punished for the same crime, but then later resumed.
My question was and is: Have law firms, including this one, installed data loss prevention software and adopted good access control policies that can be monitored by their technology? This is, after all, the second case of insider trading in three years at Wilson Sonsini. And Braverman no doubt touched a lot of sensitive files without, apparently, any alerts going off. Whatever their internal controls and policies were, they were ineffective twice.
Can a law firm trust its employees? Absolutely not. Nice to think you can, but you can't. So trust, but verify - a la Ronald Reagan. And technology can help you verify.
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Digital Forensics/Information Security/Information Technology