Being charged with insider trading is one of the most serious allegations a person involved in financial markets can face. These white collar crime charges can carry hefty fines, potential prison time, and long-term damage to professional reputations. If you or someone you know has been accused of insider trading, you may be overwhelmed with fear and uncertainty about what your next steps should be. The first thing to remember is that the legal system is complex—mistakes at the beginning can have lasting consequences.
This guide will walk you through what insider trading charges mean, what potential consequences may arise, and the most important things to do (and avoid) after being charged.
Insider trading occurs when an individual buys or sells securities based on non-public, material information. Material information is any detail that could significantly influence a company’s stock price, such as earnings reports, mergers, acquisitions, or regulatory approvals.
There are two general types of insider trading cases:
Illegal insider trading: When someone uses confidential information for personal gain on the stock market before that information is released to the public.
Legal insider trading: When corporate insiders—such as executives—buy and sell stock in their own companies, but report these trades to the Securities and Exchange Commission (SEC) to remain compliant with the law.
If you are facing charges, the government is likely accusing you of the first type, which is punishable under federal securities laws.
In the United States, insider trading can be pursued by multiple government agencies. The two most prominent are:
The Securities and Exchange Commission (SEC): The SEC has civil enforcement powers. They can impose fines, bar individuals from serving as corporate officers or directors, and bring civil lawsuits.
The Department of Justice (DOJ): The DOJ handles criminal prosecutions. If a case rises to this level, it can result in prison sentences in addition to monetary penalties.
This dual approach—civil and criminal—means you could face multiple overlapping proceedings stemming from a single investigation.
The penalties for insider trading vary depending on whether the case is civil or criminal, the scope of the conduct, and the amount of money involved. Common consequences include:
Fines: Civil penalties can reach up to three times the profit gained or loss avoided. Criminal fines may be imposed on both individuals and corporations.
Prison: A conviction can result in sentences of up to 20 years in federal prison, depending on severity.
Restitution: Courts may order repayment of profits or restitution to affected parties.
Professional Consequences: Loss of securities licenses, inability to hold executive positions, and reputational harm that can end careers.
Permanent Record: A conviction stays with you forever, affecting job opportunities and financial stability.
Given these steep stakes, insider trading allegations require immediate and strategic legal guidance.
If you have been charged, the way you respond in the first days can make or break your case. Here are the critical steps:
Exercise Your Right to Remain Silent
Speak with no one about the case—not coworkers, friends, or investigators. Anything you say may be used in court.
Hire an Experienced Criminal Defense Attorney
Your attorney should have significant experience in white-collar crimes and federal-level prosecutions. Contacting someone like Mark Broughton ensures you have knowledgeable and aggressive representation from the beginning.
Do Not Destroy Evidence
Shredding documents, deleting emails, or trying to cover your tracks often makes matters worse. Prosecutors can pursue obstruction charges, which compound legal problems.
Gather Documentation for Your Attorney
Collect any records related to your trades, communication with brokers, or financial disclosures. Having full transparency with your attorney allows them to build the strongest defense possible.
Avoid Public Statements
Do not post about your case on social media, issue press releases, or make public comments. Even seemingly harmless statements can later be twisted by prosecutors.
Every case is unique, but some common defense strategies include:
Lack of Material Nonpublic Information: The alleged information you acted on may not have been material or was already available to the public in some form.
No Intent to Defraud: Insider trading requires intent. If your actions were part of a standard trading pattern unrelated to confidential tips, intent becomes harder to prove.
Entrapment or Miscommunication: In some scenarios, a misunderstanding during communication can be presented as insider trading when no unlawful conduct occurred.
Insufficient Evidence: The prosecution bears the burden of proof. If evidence is weak or circumstantial, your attorney can challenge the credibility of their claims.
These strategies are not one-size-fits-all. That’s why having a seasoned criminal defense lawyer is crucial to tailoring an argument to your specific circumstances.
Insider trading cases are complex, often involving federal statutes, securities regulations, and complicated financial evidence. Without a skilled defense attorney:
You may inadvertently admit to wrongdoing.
You could face harsher penalties than necessary.
Your constitutional rights could be violated without you realizing it.
An experienced defense attorney like Mark Broughton not only helps protect your rights but also provides insight into plea negotiations, possible settlements, and courtroom strategies. The sooner you involve legal counsel, the greater your chances of a favorable outcome.
Do not speak to the SEC without an attorney present. Even informal conversations can provide investigators with evidence against you.
Yes. Criminal convictions can result in up to 20 years in federal prison, depending on the amount of profit involved and other case specifics.
The government must prove intent, but intent can be inferred from your actions. That’s why careful defense is necessary to show your trades were legitimate.
Most insider trading cases are federal because securities markets are regulated nationally, but state charges can sometimes arise in tandem.
Investigations can be lengthy, often taking months or years before formal charges are filed. Once charged, cases move through federal courts at a structured pace.
Being charged with insider trading is life-altering, but it does not have to define your future. With the right legal guidance, you can navigate the process, contest unfair charges, and mitigate consequences. The most important step you can take now is securing experienced legal representation.
If you or someone you love is facing insider trading charges, don’t face the legal system alone. Contact Mark Broughton, Criminal Defense Attorney, today to discuss your case and protect your future.
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