Insider trading is criminal because it is almost always linked to unlawful gain, so you may be surprised to learn that criminal prosecution actually does not hinge on profits or gain.

INSIDER TRADING

Legally speaking, insider trading is technically not an offense per se. There is no “insider trading” listed as a crime in any New York or federal law.

So what is it then? Clearly New Yorkers are still being arrested and convicted on this offense, despite its legislative non-existence. What happens is that prosecutors rely on charges of manipulation, fraud, and deceit, which are prohibited under the Securities Exchange Act.

In a typical insider trading case, a finance executive or other professional will disclose confidential information to a friend. That information usually contains useful indicators on whether the friend should buy or sell securities.

Insider trading is illegal because the friend in this scenario enjoys an unfair advantage over the general public. The manipulation, fraud, and deceit charges are viable because stockholder interests are abused.

Yet all of this begs the following question: what if the executive sharing the information does not profit? He is obviously a participant in the insider trading. Although people in his position are generally compensated in some way, the law does not actually stipulate gain as a prerequisite to guilt. The executive here is an active participant in the creation of the unfair advantage and in the abuse of stockholder interests. Accordingly, his conduct qualifies thoroughly as SEA manipulation, fraud, and deceit.

PENALTIES

Under New York and federal law, defendants may face fines and even years in prison upon an insider trading conviction. The severity of the actual penalties will vary with the specific acts committed.
Additionally, even without a conviction, defendants named in an insider trading investigation can face extremely damaging harm to their professional standing. A good securities broker earns his living by the strength of his reputation, and so even mere allegations of misconduct can have a disastrous impact.

Last but certainly not least, an insider trading case can have a devastating impact on your personal life. The stress alone is poisonous, the financial consequences are severe, and the possibility of prison is unthinkable.

LEGAL DEFENSE

As the penalties are so severe, there are several crucial things to keep in mind regarding insider trading in New York.

First, complete avoidance of liability is the first and best line of attack. Any participation in insider trading, even without profit, can be unlawful and so absolute abstention is necessary. A good corporate attorney can be an invaluable asset in matters of legal compliance.

Sometimes, however, avoidance is not always a possibility. In today’s Wall Street, mistakes just happen. If you think you may be facing an investigation or charges, you would be well-advised to consult a professional defense attorney as soon as possible. The right attorney will be able to guide you through the minefield of prosecution and out to safety. The penalties discussed above do not have to become your reality.

If you have any questions regarding insider trading criminal matter in New York City or Long Island, contact our Long Island corporate fraud federal criminal lawyers today at (516) 204-7611.

The term “insider-trading’ has been coined by most investors to be associated with illegal conduct. But in actuality, insider trading includes both legal and illegal conducts. The term generally involves the purchase or sale of securities, puts, calls or other options based on material information. Hence, not all insider-trading activities spark an investigation by the U.S Securities and Exchange Commission (SEC) and other investigative officials.

What is illegal?

Insider trading is illegal when there is a breach of fiduciary duty or other form of trust and confidence while passing nonpublic information about the security of one company to another company, usually through deception.

For those who commence the securities transaction after obtaining the nonpublic information are guilty of “tipping” which is also illegal under the SEC definition of illegal insider trading.

The SEC has purposely kept their definition of insider-trading vague, so they can maneuver investigations on suspected individuals more easily. For example, for a “controlling person” who is the supervisor of the actual tipper may be investigated for conspiracy by the SEC after recklessly disregarding the fact that violator was likely to engage in insider trading.

Depending on the nature of the crime, the SEC can implement a myriad of actions that ranges from a simple “slap on the wrist” to a criminal prosecution referral. The SEC can seek a court order to disgorge the violator’s trading profits and issue hefty penalties that may be up to three times the misappropriated profits, or pass the case along to the Federal prosecutor’s office for further action.

If you are being investigated or arrested for securities fraud in New York or Long Island, then call our Long Island federal fraud lawyers at 516.204.7611 to get professional legal advice.

Insider trading in securities is a crime according to the Securities Exchange Act of 1934 and the Insider Trading Sanctions Act of 1984 when a person knowingly and intentionally discloses nonpublic information about a company trades in the company’s securities and makes a profit or avoids a loss.

For example, if an employee of a major corporation with knowledge of certain non-public information regarding the company’s mergers and acquisition with another publicly traded company, violated his/her duties of trust and confidence by disclosing this information to potential clients so they can rapidly buy the company stock several days before the merger’s public announcement; then that employee may be criminally liable for inside trading. The client who agreed to the employee’s plan may also be considered a co-conspirator, and be criminally liable for conspiracy charges.

Legal authorities such as the FBI and the US Securities and Exchange Commission (SEC) tend to conduct routine reviews or audits on major corporations and businesses. Often at times, insider-trading investigations by the Office of Inspector General (OIG) are triggered by certain discrepancies found within the company’s audits. Once the SEC receive a filed complaint or realize a discrepancy within the company’s audit, agents will either hone in on the allegation and investigate on the matter or refer the case to the OIG.

Prevention is usually the best way to go. At the beginning of a fraud investigation, it is best to seek an experienced defense counsel for a consultation on what to do next.

If the FBI, SEC, or OIG for is recently investigating on you for inside trading in New York or Long Island, then call our Long Island corporate fraud defense lawyers at (516) 204-7611 to get professional legal assistance.