You are happily working at a public company with 100,000+ shares of stock. The stock price was in the dumps. It was close to $20 per share when you started and was now down to less than $0.50. Telehealth was having some rough patches. Selling teeth aligners, Smile Direct had served more than 2 million customers. It was facing fights from dental professionals and unhappy customers.
You boss lets it slip that the company is going to file bankruptcy.
What do you do?
Sell you stock before it becomes even more worthless?
Perhaps you check SmileDirect’s Code of Business Conduct and Ethics which only permits trading in the company stock during open trading windows communicated by the company. The window is closed. Do you sell the stock?
Martin Tuncaydin chose to sell. A few days later the stock slid even further from the sales price of $0.43 to $0.16 when the bankruptcy filing was publicly announced. He avoided almost $30,000 in losses.
Temporarily.
If you’ve gotten this far in the story, you know that illegal insider trading is not limited to realizing gains, but also includes avoiding losses.
The Securities ad Exchange Commission does not like this. It forced disgorgement of the avoided losses and an equal amount of fine.
Sources:
- In the Matter of Martin Tuncaydin February 13, 2026
- SmileDirectClub Shuts Down After Filing for Bankruptcy by John Yoon in the New York Times