When Words Betray: What Insider Trading Scandals Teach Us
- Julian Guthrie
- Sep 9
- 2 min read
Insider trading rarely begins with a trade. It starts with a word, a phrase, a suggestion, or a hint.
Just this summer, Duncan Stewart pleaded guilty in Australia to insider trading tied to a $776 million takeover of Kidman Resources by Wesfarmers and his sentencing hearing is slated for Sept. 15. An investment banker, Stewart allegedly acted on information from his brother-in-law, who was CEO of the target company, according to the Australian Securities & Investment Commission. The scandal cost reputations and reinforced what regulators already know: The earliest warning signs of misconduct often live in communication.
Emails. Text messages. Chat threads. Snippets of language that signal someone knows more than they should.
The problem? Humans often overlook those cues until it’s too late, and banks often rely on outdated, lexicon-based machine learning to detect material non-public information breaches. By then, regulators are knocking, headlines are flying, and trust is eroded.
That’s where technology like HarmCheck by Alphy comes in. We built HarmCheck to analyze digital communications in real time, surfacing subtle but telling signals: ambiguous ticker mentions, coded phrases in hiring, housing, and lending, and unusual patterns in tone. Instead of relying on blunt keyword filters, HarmCheck understands language in its human complexity.
Three lessons from Stewart’s case:
Words leave trails. Even in private channels, phrases can reveal nonpublic knowledge.
Detection must be proactive. Waiting for an SEC or ASIC probe is too late — firms need real-time safeguards.
Reputation is fragile. Once headlines hit, no fine or settlement can restore lost trust.
Insider trading isn’t just about numbers on a balance sheet. It’s about words — careless, coded, or calculated — that carry legal weight.
At Alphy, we believe the best compliance starts by monitoring more closely the words people use. Because the next billion-dollar scandal might not begin with a trade. It could easily begin with a sentence.
Book a free demo of HarmCheck today: http://harmcheck.ai/demo
Julian Guthrie is the CEO and founder of Alphy.
HarmCheck by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication.
