Could Headphones Have Averted a Work-From-Home Tragedy?

By Elizabeth Torphy-Donzella- Shawe Rosenthal LLP

February 29, 2024

Recently I was updating an employee handbook and beefed up the work from home policy. I made sure the policy specified that the employee must have a dedicated work location, free from distraction, and must use only company-issued laptops. A reliable internet connection with appropriate security was a must-add, as was the requirement to only use the secure company portal for work (no emailing yourself documents). All the usual things.

I did not think to add, “make sure your spouse is not listening in on your calls with clients about upcoming corporate mergers and acquisitions.”

According to the Securities and Exchange Commission, the husband of an energy company manager did just that (and recently consented to an entry of judgment on charges of insider trading). While his wife was working from home taking calls about her company’s $1.3 billion plan to acquire certain assets of another company, the husband listened in. He used the non-public information to buy 46,000 shares in the target company. Once the deal closed, he cashed in with a cool $1.76 million profit.

Feeling badly (and probably needing to explain that large deposit to the family checking account), he confessed his deed to the Mrs. a month later. He told her he was motivated by the desire to enable her to work less hours. He achieved that much. She promptly informed her boss, filed for divorce, and lost her job. Although she was not accused of participating in the fraud, one suspects she did not follow that WFH policy to the letter.

The ill-fated husband also pled guilty to securities fraud charges filed by the Department of Justice and is awaiting sentencing.

The problem with policies is that regardless of what words you put on paper, people often don’t read and follow the rules. Think of former Hillary Clinton aide, Huma Abedin, forwarding classified emails to a computer she shared with her then-husband, Anthony Weiner, to access while working from home. That certainly violated some State Department policies on national security!

This saga is a reminder that important rules require elevated communications. Companies that continue to allow flexibility in work should not think a well crafted policy solves everything. Regular reminders about the reason for the rules and the consequences for failing to follow them should be provided to employees. Maybe even circulating stories like this one would help to drive home the consequences.

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