There are numerous federal laws restricting the financial conduct of individuals and businesses. Neither an organization seeking investment capital nor financial professionals managing people’s resources should lie to trick others into conducting certain financial transactions. Additionally, there are rules against making use of non-public information for personal financial gain.
Insider trading laws specifically prohibit organizations with access to non-public information and the professionals who work at those companies from using that information for personal financial gain. Those accused of insider trading due to personal financial moves or transactions conducted by a business that they manage could face federal prosecution and very steep penalties should they plead guilty or get convicted at trial.
Criminal and/or civil penalties could result
The laws against insider trading will typically lead to federal prosecution because such business conduct usually involves federal infrastructure and interstate business transactions. The penalties for a federal insider trading conviction are very serious. A single insider trading charge could lead to up to 20 years in federal custody. The courts can also impose fines of up to $5,000,000. The courts can also impose civil sanctions instead of prosecuting people in some cases. The financial penalties imposed in such cases can amount to three times the total financial gain someone derived from their questionable trading practices.
Those civil and criminal consequences are completely separate from the rights of the people affected by the insider trading. Parties that may have suffered financial setbacks due to someone’s financial transactions could potentially speak compensation from the defendant in civil court. Their conviction in criminal court would likely bolster such claims, possibly leading to large judgments against someone already subject to fines and financial penalties.
Complex crimes require complex defense strategies
Allegations of insider trading often intimidate people into a guilty plea, but such pleas leave people at the mercy of a federal judge for sentencing and at risk of civil litigation as well. Those who want to prove that they did not improperly use private business information for personal or organizational profit may need to go back over their financial records very carefully, a process which almost always requires outside legal support.