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What are the penalties for insider trading?

On Behalf of | Sep 7, 2023 | Criminal Defense, Felonies |

Many companies offer their employees an opportunity to buy stock in the organization. However, if an employee is accused of insider trading, it can carry serious penalties.

Insider trading overview

Insider trading occurs when a person illegally buys or sells stock or other security, like bonds, based on material information about the company that is not available to the public.

It can also involve sharing tips with others who then take action with their stock based on that information. Insider trading is prohibited by the Securities and Exchange Commission (SEC).

Material means that the information is likely to influence an investor’s decision about whether to buy, sell or hold their stock. Insiders may include regular employees as well as officers, directors and other executives. Essentially, insider trading gives the stockholder an unfair advantage.

Penalties for violations

The SEC is responsible for investigating and prosecuting insider trading cases, which may involve analyzing financial transactions.

If a person is convicted of insider trading, they can face fines, prison and civil lawsuits, in addition to being required to repay any money they made through insider trading. The length of the prison sentence can vary depending on the severity of the issue and fines can range from thousands to millions of dollars.

In some cases, the convicted person may be required to forfeit their assets. They may also be prohibited from serving as an officer or director of a public company in the future.

If a person has been accused of insider trading and needs help, there is assistance available.