Insider trading is a serious crime across the United States and a conviction of such an offense carries harsh penalties. If you have been accused of insider trading, it’s crucial to work with a skilled Bergen County Criminal Defense Attorney to maximize your chances of a favorable outcome.
What is Insider Trading?
Insider trading refers to the illegal act of using non-public information about an organization for personal gain. Essentially, it’s the buying or selling of a company’s securities by those who possess material information about the organization that has not yet been made publicly available. You should note that material information refers to anything that could substantially impact an investor’s decision to buy or sell a security.
Investing in stocks always carries an element of risk, as you can never predict what events may cause a stock’s value to either plummet or skyrocket. The stock market is a complex environment where traders make decisions based on several factors, including a company’s performance, public perception, recent developments, new product launches, etc.
However, when someone has access to information that has not yet been made public, they have the opportunity to buy or sell stocks ahead of others. This compromises the integrity of the markets and is unfair to everyday investors who don’t have access to the same privileged information as insiders.
It’s important to understand that New Jersey has implemented the NJ Securities Act of 1978, which prohibits fraudulent practices associated with the purchase and sale of securities. On a federal level, the Securities Exchange Commission (SEC) enforces strict regulations that prohibit the misuse of insider information to maintain fair markets and to prevent unfair advantages that could harm other investors.
Generally, anyone with a duty to a company can be considered an insider. The SEC defines an insider as, “an officer, director, 10% stockholder, and anyone else who possess inside information because of their relationship with the company or with an officer, director or principal stockholders of the company.
What Are the Potential Penalties?
The SEC and the United States Department of Justice (DOJ) enforce insider trading laws. The penalties can be both civil and criminal, depending on the severity of the offense. In most cases, the SEC can impose civil fines of up to three times the profit gained or the loss avoided as a result of insider trading. In addition, the SEC can seek a court order to prohibit you from serving as officers or directions of public companies if you are found guilty of divulging insider information for personal gain.
If convicted, you can face up to 20 years of imprisonment for each violation. Alongside imprisonment, fines of up to $5 million can be imposed, and corporations can face fines of up to $25 million per violation under the Securities Exchange Act of 1934.
When faced with criminal charges for insider trading in New Jersey, it’s in your best interest to enlist the help of a determined criminal defense attorney from The Law Office of Carl Spector, who can help defend your rights and interests. Connect with our firm today to learn how we can fight for you.
