Insider trading involves buying or selling securities based on non-public information about a company. This information can include financial results, pending acquisitions, or other significant developments not yet made public. Insider trading is illegal in the United States and many other jurisdictions.
At John D. & Eric G. Johnson Law Firm, we provide legal guidance to those facing insider trading allegations and help them understand the potential charges and penalties. If you face insider trading charges, we can help.
What Is Insider Trading?
Insider trading refers to the buying or selling of securities based on confidential and non-public information about a company. The most common types of material information include financial results, upcoming acquisitions, or other significant company developments. If you trade such information, you violate the law. The law considers insider trading unethical because it gives certain individuals an unfair advantage over others in the market.
Insider trading also extends to situations where individuals tip off others about confidential information. If you disclose non-public information to someone and they use it to trade, you could face charges for insider trading.
Federal Laws Governing Insider Trading
Several federal laws govern insider trading, including the Securities Exchange Act of 1934 and the Insider Trading Sanctions Act of 1984. The Securities and Exchange Commission (SEC) enforces these laws and ensures compliance within the financial markets. If you engage in insider trading, the penalties can be severe. These include hefty fines and potential imprisonment.
The SEC monitors trading activities and investigates suspicious transactions that might indicate insider trading. If you violate federal laws governing insider trading, you face criminal charges, civil penalties, and even permanent restrictions on holding positions in publicly traded companies.
How Insider Trading Constitutes White Collar Crime
Insider trading is a white-collar crime because it typically involves deceit and financial gain without physical violence. People who commit white-collar crimes often hold positions of trust or authority and exploit confidential information for personal gain. Insider trading undermines public trust in financial markets, eroding confidence in their fairness and transparency.
Penalties for Insider Trading Under Federal Law
Federal law imposes severe penalties for insider trading. Those convicted of insider trading may face fines up to three times the amount of profit gained or loss avoided. In addition to fines, convicted individuals could face prison sentences ranging from a few months to several years. The length of the sentence depends on the severity of the offense and the individual’s criminal history.
In addition to the legal penalties, individuals convicted of insider trading often suffer reputational damage that affects their personal and professional lives. A criminal record can make it difficult to secure future employment or professional licenses. The damage to your reputation can be permanent and have long-lasting effects on relationships and career prospects.
Defense Options Against Insider Trading Charges
If you face insider trading charges, several defense strategies may help your case. One defense involves arguing that you did not have access to the non-public information when making the trade. If you can prove that the information was publicly available or that you didn’t know it was confidential, the prosecution’s case may be weakened. Another defense involves demonstrating that you did not intend to deceive or defraud anyone. If there was no intent to manipulate the market, this could serve as a valid defense.
Another potential defense involves showing that you relied on advice from a professional, such as a financial advisor or attorney. If you acted in good faith based on the advice of a qualified individual, this could mitigate your liability.
Reach Out to Our Team As Soon As Possible
When facing insider trading charges, hiring an experienced criminal defense lawyer is essential. A lawyer with expertise in securities laws can guide you through the legal process, explain the charges, and evaluate the evidence. Your attorney will work to develop a defense strategy tailored to your specific situation, improving your chances of a favorable outcome. Acting quickly to secure legal representation is critical when facing insider trading allegations.
A knowledgeable attorney can help you navigate the complexities of federal securities laws. At John D. & Eric G. Johnson Law Firm, we assist clients facing insider trading charges by providing expert legal representation. Call John D. & Eric G. Johnson Law Firm at (318) 377-1555 or use our contact form.