If you are being investigated by the federal government or the State of New Jersey for insider trading, you need to take the situation very seriously. Insider trading cases tend to be very complex and can lead to penalties that could result in you spending years or even decades in prison on top of paying hefty fines. Because insider trading cases are so complicated, they often take a long time to develop while law enforcement investigates the allegations and gathers evidence. It is during these early stages that having the help of an experienced white collar criminal defense attorney can make a significant difference.
The Lento Law Firm's Criminal Defense Team includes attorneys who have years of experience defending clients all across New Jersey who are being investigated for or charged with insider trading. Whether it's the federal government that believes you may have been involved in insider trading or New Jersey law enforcement, the sooner you have one of our experienced attorneys working for you, the better it will be for your defense. Call the Lento Law Firm's Criminal Defense Team today at 888.535.3686 or fill out our contact form, and we will schedule a confidential consultation with you to learn more about your case and tell you how we can help.
Insider Trading Laws
Both federal and state laws prohibit insider trading. At the federal level, insider trading essentially means purchasing or selling securities based on “material nonpublic information” about the security or the company issuing the security, when the person doing the buying or selling has “a duty of trust or confidence” that the person owes to the issuer of the security, the issuer's shareholders, or the person who is the source of the nonpublic information.
Typical defendants in an insider trading case are company employees or advisors who work closely with a company, who learn about something that is likely to change the company's financial position before that information is made available to the public. They then buy or sell shares in the company (or “short” or “long” the company's stock) before that information becomes public, hoping to benefit from the change in the value of the company's securities that is likely to take place once the information does become public.
There are some important requirements that must be met before federal insider trading charges can apply to stock transactions. First, the information disclosed to the defendant must be “material” – in other words, it must make a difference when it comes to the potential value of the stock or other security. It must also be “nonpublic,” meaning that it is information that the public is not able to learn about. Finally, the person who receives the information and uses it to trade must have a duty to the company, to its shareholders, or to the source of the information – to keep the information confidential and not to trade based on that nonpublic information.
While most insider trading cases are federal, brought by the Securities and Exchange Commission working with the Department of Justice, New Jersey law similarly makes it illegal to defraud anybody else in connection with the “offer, sale, or purchase of any security.”
Defenses to Insider Trading Allegations
There are a number of defenses to insider trading allegations. These include defenses that focus on the elements of the crime, in particular:
- That the defendant was not an “insider” and did not owe the company a duty to keep the information they learned confidential
- That the information was not “material”
- That the information was not disclosed in a way that indicated it was confidential
There are other defenses to insider trading charges that are written into the federal regulations. These generally relate to the defendant being able to prove that the challenged securities transaction had been planned in advance, and in such a way that the defendant had little control over the transaction when it did take place.
Insider Trading Investigations
Insider trading often reveals itself in the form of trading “spikes” that occur shortly before a company announces information that causes the stock price to change. Trading activity is typically tracked by individuals who are active in the market, and when these spikes occur, they are often spotted by outsiders. In addition, certain company insiders are required to disclose their trading in the company's securities to the SEC, and these reports are part of the stock's public record.
In addition, the Financial Industry Regulatory Authority (FINRA) is an organization that is responsible under federal law for supervising broker-dealers. One of FINRA's responsibilities is identifying instances where misconduct, including insider trading, has occurred and referring suspected misconduct to the SEC and other regulatory agencies.
An investigation into a suspected illegal insider trading can take months or sometimes even years before it is complete. The SEC and prosecutors have limited resources, and while that means that not all instances of suspected insider trading are investigated, it also means the investigations that are taking place may continue for quite some time. When you are the person under investigation, the stress that comes from an extended period of not knowing what's going to happen can be considerable.
When you work with one of the experienced attorneys from the Lento Law Firm's Criminal Defense Team, you'll have someone on your side who understands how insider trading investigations work. We will be there for you to answer your questions, to act as the go-between when the government wants information, and to help you prepare for interviews and information requests. Having one of us on your team can make a significant difference in how stressful the investigation process is for you and for those close to you.
Insider Trading Charges
In some cases, the government may decide to bring charges after the insider trading investigation is complete. If you are charged, you will need a strong defense. Depending on the allegations, a conviction on insider trading charges can land you in prison for 20 years or, in some cases, more.
That said, the vast majority of insider trading cases settle. As with other criminal cases, how things resolve themselves depends on how strong the government's case is and what defenses you may have to the allegations. The single best way to improve your chances of a favorable resolution of your insider trading case is to work with an attorney who has experience defending other clients in these kinds of cases. The Lento Law Firm's Criminal Defense Team knows how important your case is, and we will be focused on your defense from the moment we take on your case.
Where Your Case Will be Heard
If you're facing federal insider trading charges, your case will be heard in one of New Jersey's three federal courthouses, which are located in Newark, Trenton, and Camden. If you are facing state insider trading charges, your case will be heard by a Superior Court judge located in one of New Jersey's 21 county courthouses. In either case, the Lento Law Firm's Criminal Defense Team is familiar with the court and the procedures that will apply in your case.
The Lento Law Firm Can Defend You Against Insider Trading Charges
Being under investigation for insider trading can be very stressful. Not knowing whether the government will decide to bring charges against you and having that uncertainty continue for days, weeks, and months can seem like a nightmare that just won't end. Things don't get better if you're charged with insider trading; the court process leading up to a trial can take just as long, if not longer than the investigation, and the prospect of facing significant fines and prison time can take a significant toll on your mental and even physical health.
You need an advocate. You need someone with experience defending against serious white-collar criminal charges. You need the Lento Law Firm's Criminal Defense Team on your side. No matter if your case is still being investigated or if you are facing criminal insider trading charges, we can help. Here is how:
- We will keep you informed about what's happening with your case. Not knowing what's going on can be maddening. Our attorneys will keep you in the loop and will be there when you have questions about what's going to happen next.
- We can protect your rights during the investigation. Being under investigation can be very intimidating. We can be there with you, making sure that your rights are respected at every step of the way and that you are not bullied into saying something that can be taken the wrong way and used against you.
- We can conduct our own investigation. In some cases, the government fails to gather information that could help with your defense. We can pursue that information and bring it to the government's attention.
- We will negotiate for you. All of our experience, our understanding of the law, our knowledge of the courts – we can use that, when appropriate, to negotiate a favorable resolution of your case.
- We aren't afraid to go to trial. We know trials can be scary when your liberty is on the line. The government knows that, too, and will use that against you. But because we regularly try criminal cases, the government also knows that when your attorney is from the Lento Law Firm, we are not going to be intimidated if the case goes to trial.
- We know our way around New Jersey's state courts as well as the federal courts located in the state. Whether you are facing state or federal charges, we are there to fight for your rights and to defend you against the allegations you're facing.
If you are under investigation for or have been charged with insider trading, call the Lento Law Firm's Criminal Defense Team at 888.535.3686 or fill out our contact form, and we will schedule a confidential consultation. You need an effective advocate when facing insider trading allegations – the Lento Law Firm knows what it takes to win.
