21 Red Flags Every Brokerage Firm, RIA, and Public Company Must Monitor
Introduction
Insider trading remains one of the most aggressively enforced areas of securities regulation. Firms must monitor not only the conduct of executives and employees, but also the actions of contractors, vendors, consultants, and even family members of insiders.
This checklist highlights 21 critical red flags that compliance teams should track to reduce exposure, prevent violations, and strengthen internal controls.
Red Flags Related to Material Non-Public Information (MNPI)
- Access to MNPI without a legitimate business need
- Employees viewing confidential files outside normal hours
- Unexplained downloads of sensitive documents
- Discussions of MNPI over personal devices or messaging apps
- Travel or meetings involving deal teams not on public calendars
Red Flags Related to Employee Trading Behavior
- Trading shortly before earnings announcements
- Trading ahead of mergers, acquisitions, or major deals
- Patterns of profitable trades disproportionate to market movements
- Failure to pre-clear trades
- Trading in blackout periods
- Employees trading in client or issuer securities they cover
Red Flags in Tipper–Tippee Scenarios
- Employees discussing deal information with friends or relatives
- Personal relationships overlapping with access to MNPI
- Employees suddenly communicating with dormant contacts before trading activity
- Sharing “market rumors” that closely match MNPI
Red Flags in Vendor, Contractor, and Consultant Access
- Outside vendors handling earnings or deal documents
- Consultants accessing data rooms or pre-release results
- PR firms previewing press materials with market-moving information
Operational & Systemic Red Flags
- Inadequate restricted lists or watch lists
- Lack of centralized trade monitoring
- Employees working remotely without confidentiality controls
How to Use This Checklist
This tool is meant to help firms:
- Identify gaps in compliance
- Strengthen insider trading policies
- Reduce regulatory exposure
- Train employees and executives
- Document risk assessments
Use it during compliance audits, annual reviews, or policy updates.
Call to Action
If your firm needs assistance developing or updating insider-trading compliance policies — or you are facing an SEC or FINRA inquiry — we can help.
👉 Schedule a confidential review of your insider trading compliance program. Call us at 212-509-6544 or email mja@sallahlaw.com
 | Representing Advisors and Investors, Nationwide. |
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
