Insider Trading

Miami Insider Trading Attorney

Insider trading is a serious white-collar crime that has been increasing in South Florida. It happens when individuals use non-public, confidential information to buy or sell securities, gaining an unfair advantage in the stock market. If you are accused of insider trading in South Florida, you could face hefty fines, jail time, and other severe legal consequences. With so much at stake, it is crucial to seek expert legal counsel as soon as possible in order to determine the best way to proceed.

At The Kirlew Law Firm, we have over 15 years of experience defending individuals against white-collar crimes such as insider trading. We take pride in our work and dedication to representing clients passionately and aggressively. Schedule a free, no-obligation, and confidential consultation with us today—call (305) 521-0484.

What is Insider Trading?

Insider trading refers to the act of making securities trades (think stocks, options, and bonds) based on information that is not accessible to the public. Imagine a senior company executive who decides to buy a considerable number of shares after learning the news that is likely to cause the stock price to rise, but before this information is actually made public.

Insider trading is usually considered illegal because it undermines the principles of fair play and equal opportunity in the financial world. And unlike other types of investment fraud, the victims here are not just individual investors—the entire market is at risk of manipulation when insider trading occurs.

Who is an “Insider”?

According to SEC Rule 10b-5, the definition of an insider is surprisingly wide-ranging. You might think that only top executives, major shareholders, or those with access to confidential information because of their relationship with the company would be considered insiders, but the definition goes beyond that.

Even employees who regularly come across confidential information as part of their job are considered insiders. And if someone outside the company receives a “tip” from an insider about the material, non-public information, they too become an insider. Think of an elected official or a judge who becomes aware through their roles as government officials that a particular patent will become available or a certain company has an emerging technology before the public is aware.

This definition even extends to insiders’ family and close friends. For example, if the CEO of a company shares the news of an upcoming merger with their son, and the son then buys stock in the company before the merger is announced to the public, both the CEO and the son would be considered insiders.

Insider Trading Enforcement

The SEC (Securities and Exchange Commission) is the leading federal agency responsible for regulating the market and identifying insider trading. It is also the primary regulator that investigates and prosecutes cases of illegal securities transactions. The SEC has a special division—the Division of Enforcement (DOE)—responsible for taking legal action against those who violate securities laws through insider trading.

But the SEC is not the only one cracking down on insider trading! The Department of Justice (DOJ) and FINRA (Financial Industry Regulatory Authority) are two other key players in investigating and prosecuting insider trading. They can bring disciplinary actions or criminal charges against individuals and companies who engage in insider trading, ensuring that everyone in the industry follows the rules.

What are the Consequences of Insider Trading

The consequences of insider trading, like all federal offenses, are imprisonment, supervised release (probation), and fines. A person found guilty can be sentenced up to 20 years in prison for each count and the fine can be as high as $5 million.

Additionally, if you made any money through illegal insider trading, you may be required to forfeit it to the government This is called disgorgement and includes your ill-gotten gains and any interest accumulated.

Conspiracy charges may also be brought against individuals and companies involved in insider trading. Conspiracy charges could be brought against anyone in an agreement to commit insider trading, regardless of whether or not the crime was actually committed.

Martha Stewart’s Insider Trading Scandal

Martha Stewart is a prolific American television personality. But she is also (in)famous for being at the center of one of the most high-profile insider trading scandals in recent history.

It all went down in December 2001. Martha sold nearly 4,000 shares in the biotech company ImClone Systems. The next day, the U.S. Food and Drug Administration (FDA) announced that it denied ImClone’s application for a new cancer drug. The announcement made ImClone’s stock price tumble by about 18% on the first day of trading.

The government charged Martha and her former stockbroker with multiple counts of securities fraud—including insider trading—in June 2003. Prosecutors claimed that Martha and her stockbroker had sold the ImClone shares based on advance notice of the FDA’s decision, whereas Martha and her stockbroker contended that they had already agreed to sell the stock if it dropped below a certain price. Martha was found guilty by a jury in May 2004.

As a result of her actions, Martha served five months in prison, five months of home confinement, and two years of probation. She also had to pay a $30,000 fine for crimes related to insider trading. It is a cautionary tale that shows how insider trading can have serious consequences, no matter how famous or successful you are.

Act Quickly to Defend Your Rights—Contact the Kirlew Law Firm NOW!

The stakes are high if you are facing insider trading charges. You could face serious fines and even prison time without a solid defense. That’s why it is crucial to have a seasoned Miami white-collar lawyer like Brian Kirlew, Esq. on your side.

Brian and the team of legal professionals at the Kirlew Law Firm are committed to providing each client with the individualized attention they deserve. With a proven record of success, you can trust that Brian and his team will fiercely fight to protect your rights and challenge any unjust accusations against you. Take control of your defense by calling the Kirlew Law Firm at (305) 521-0484 or reaching out online now.