On May 6, 2026, the SEC charged 21 individuals for their alleged involvement in a wide-reaching insider trading scheme that generated millions of dollars in illicit profits. According to the SEC, the scheme involved material nonpublic information (“MNPI”) misappropriated from multiple global law firms and used to trade ahead of more than a dozen corporate transactions.
The SEC’s complaint alleges violations of the federal securities laws’ insider trading provisions and seeks permanent injunctions, disgorgement, prejudgment interest and civil penalties.
Background
According to the SEC, between 2018 and 2024, Los Angeles mergers and acquisitions attorney Nicolo Nourafchan and his associate Robert Yadgarov orchestrated a scheme that utilized confidential information obtained from law firms involved in pending mergers, acquisitions, and tender offers. The SEC alleges that Nourafchan misappropriated MNPI relating to more than twelve corporate transactions from his law firm employers and shared that information with Yadgarov and others.
The SEC further alleges that Nourafchan and Yadgarov recruited another corporate attorney who also provided confidential transaction information obtained through his law firm employment. According to the complaint, the information was then distributed to a broader network of participants who traded securities and options before public announcements.
The SEC alleges that several participants agreed to provide a portion of their trading profits back to the original tippers in exchange for access to confidential information. Other recipients allegedly passed the information to additional traders, creating a broad tipping network involving family members, friends, and business associates.
Many of the alleged trades involved merger targets and tender offers. According to the SEC, participants frequently purchased shares and call options shortly before public announcements, generating substantial profits when the transactions were disclosed, and the target companies’ stock prices increased.
The complaint also highlights the SEC’s continued use of communications records, relationship analysis, and trading data to identify insider trading activity. The agency alleges that information moved through multiple layers of participants, resulting in liability not only for the original source of the information but also for downstream recipients who allegedly traded on the tips.
In announcing the case, Joseph Sansone, Chief of the SEC’s Market Abuse Unit, stated that “Today’s action highlights the SEC’s unwavering commitment to uncovering sprawling schemes, like the one alleged here, and holding individuals up and down the tipping chain accountable for their fraudulent conduct.”
Salus GRC Takeaways
The key takeaway for firms is clear: MNPI risk is no longer limited to direct access or formal channels, making strong controls, escalation protocols, and surveillance increasingly critical.
- Insider trading enforcement remains a top SEC priority, particularly where regulators identify organized networks that share and trade on material nonpublic information (MNPI).
- Liability extends beyond the original source of MNPI and can include downstream recipients, friends, family members, business associates, and others who knowingly trade on improperly obtained information.
- Firms should maintain robust MNPI controls, including clear escalation procedures, regular employee training, and policies addressing information received through professional, personal, and informal relationships.
- The SEC continues to leverage communications records, relationship mapping, and trading surveillance to detect insider trading, underscoring the importance of strong compliance documentation and monitoring programs.