Insider trading occurs when someone uses non-public or otherwise privileged, material information when trading stocks or other such securities. If you've been accused of insider trading in Pennsylvania, you likely face federal charges. A conviction could affect everything from your freedom and bank account to your future employment prospects and personal relationships.
Protecting your rights now is essential. One way to do so is to enlist the help of legal professionals with experience handling cases like yours.
At the LLF Law Firm Criminal Defense Team, offering insider trading defense services throughout Pennsylvania, our white collar criminal defense attorneys are available to offer a dedicated defense at this critical time. Learn more about what we can do for you by submitting your information via our online contact form or by calling our offices today at 888-535-3686.
The Federal Insider Trading Statute
There is no specific federal statute that directly prohibits insider trading. Rather, the primary law against insider trading is SEC Rule 10b-5, which prohibits the use of “manipulative and deceptive devices [...] in connection with the purchase or sale of any security.”
Often, the federal government will prosecute an insider trading case under 15 USC 78j: Manipulative and Deceptive Devices. This law establishes the general prohibition against employing anything that qualifies as a manipulative or deceptive device when selling or purchasing a security. SEC Rule 10b-5 clarifies the law by establishing that privileged, non-public information can qualify as a type of manipulative and deceptive device.
Some cases of insider trading qualify as securities fraud. In these scenarios, the government might prosecute a case under 18 U.S.C. Section 1348, the federal law prohibiting securities fraud and similar types of fraudulent activities on the part of corporate insiders.
Basic Examples of Insider Trading in Pennsylvania
Insider trading can take many forms. The following basic examples are simply meant to offer an idea of what this practice can look like:
- Corporate-level insider trading: Often, CEOs and other such figures will have access to privileged information that the public doesn't have access to. For example, a CEO might have information leading them to believe an upcoming earnings report will be negative enough to affect the stock price. Thus, they might sell off their stock to avoid a loss. This example of insider trading demonstrates how someone can engage in the practice without necessarily making a profit. Employing privileged information to avoid a loss can still qualify as insider trading.
- Individuals leveraging tips: It's fairly easy for a corporate insider to share privileged information with family members and friends. Those family members and friends can then use that information to make decisions about whether to buy or sell certain stocks. In this scenario, a defendant might have even engaged in insider trading without necessarily realizing they were doing so, as they might not have understood the information they were provided with was non-public. This is a factor we may account for when planning your defense.
- Outside parties employing non-public information: Someone doesn't necessarily have to work at a company (or be a friend or family member of a corporate-level employee) to have access to privileged corporate information. Lawyers, financial advisors, and other such parties can also have access to non-public information that they may employ when making trading decisions. Doing so, however, is illegal.
Don't worry if your particular situation doesn't resemble any of the above. At the LLF Law Firm Criminal Defense Team, we're prepared to handle any type of insider trading case. We'll answer your questions to help you better understand the charges against you.
Potential Criminal Penalties for Insider Trading in Pennsylvania
Because the government may prosecute insider trading cases under various laws, the penalties that someone may face if convicted of an insider trading violation can depend on numerous factors.
That said, the following are potential penalties of insider trading that you may face if charged with a violation:
- A prison sentence of up to 20 years
- A fine of up to $5,000,000 for an individual
- A fine of up to $25,000,000 for a corporation
Any of these penalties can have devastating, long-lasting consequences. A hefty fine can destroy a corporation. A lengthy prison sentence can limit an individual's freedom and future employment prospects for decades.
These points aren't meant to frighten you. They're meant to emphasize the importance of coordinating with legal professionals when facing insider trading charges in Pennsylvania. Our Criminal Defense Team at the LLF Law Firm can offer you the peace of mind that comes from knowing lawyers with relevant experience are handling your case.
Other Potential Consequences of Insider Trading
It's worth noting that an insider trading conviction can result in more than just criminal penalties. Other potential consequences of a conviction include:
- There's a very good chance that a conviction of insider trading will result in a defendant losing their job. Because of the implications of this type of crime, a conviction may also cause potential future employers to fear that the defendant is too untrustworthy to hire.
- Again, a conviction can result in a major fine, a major jail sentence, or both. Someone facing insider trading charges needs to consider the damage these consequences could do to their personal relationships.
- In some cases, being convicted of insider trading violations can result in someone being barred or banned from participating in certain professions/industries and/or filling certain corporate roles.
- Even after fulfilling the terms of a conviction, a felon may face limitations and restrictions that significantly impact various areas of their lives. For instance, they may struggle to obtain credit, or they might face travel restrictions.
You don't necessarily have to face these consequences just because you've been charged with an insider trading violation. Review your case with a member of our Criminal Defense Team at the LLF Law Firm for more information about your options.
Criminal Defense Strategies in Insider Trading Cases
No two cases are exactly alike. At the LLF Law Firm, we'll tailor our approach to the specific details of your situation.
The best way to learn how we may approach your case is to review it with a member of our team. We'll take a deep dive into the nuances of the case to determine potential defense strategies.
In the meantime, the following examples can give you a general sense of how we may defend a client facing insider trading charges in Pennsylvania:
- Weak case against a client: Insider trading cases can be very complex. In some ways, the prosecution in an insider trading case faces the challenging task of proving beyond a reasonable doubt that a defendant made investment decisions for specific, illegal reasons. In reality, most investors weigh a variety of factors when making investment decisions. A common defense strategy in an insider trading case may thus involve challenging the strength of the case against our client. We may show that the prosecution has offered minimal or weak evidence, failing to prove that a client made investment decisions because they had privileged, non-public information.
- Defendant didn't possess material or non-public information: The nature of the information (or lack thereof) upon which an investor bases their decisions plays a key role in any subsequent insider trading cases. The prosecution must show that an investor had some sort of unfair advantage because they possessed material and/or non-public information that gave them unique insights into a potential investment's prospects. We can challenge the notion that the information a client referenced when making an investment decision qualifies as material or non-public.
- A trade/investment was part of an approved plan: In unique circumstances, trades or investments that might typically qualify as insider trading may actually be legal exceptions. Essentially, if a trade or investment was made as part of an approved plan or contract which didn't allow one to substantially deviate from the plan, it can essentially be argued that the trade wasn't made due to privileged information—even if a defendant technically had access to such privileged information when making the trade. This type of defense is complex, highlighting the benefit of working with insider trading criminal defense attorneys with the experience necessary to handle a case like yours.
Legal professionals with experience relevant to someone facing insider trading charges in PA are exactly what you'll find at the LLF Law Firm Criminal Law Team. Again, the above were merely examples. We'll happily answer your questions to give you a clearer sense of the specific way we may handle your case.
Contact the LLF Law Firm for Help With Your Pennsylvania Insider Trading Case
Whether you're an individual accused of using privileged information to “game the stock market” or a corporate leader accused of selling stock based on non-public knowledge, if you're facing insider trading charges in Pennsylvania, a legal defense can play a major role in your case's outcome.
Now is the time for action. The sooner our LLF Law Firm Criminal Defense Team can get started on your case, the sooner you can start relaxing again. Get started today by calling us at 888-535-3686 or submitting your information through our online contact form.
