Insider Trading Defense Attorneys in New Jersey

What You Face if Charged with Insider Trading

In general, an insider trading indictment alleges that a defendant has:

• Traded stocks or securities on the basis of inside information and/or
• Provided inside information to another individual(s) who traded on that information.

If you have been accused of trading on inside information, the government must show that you:

• Bought or sold stock or securities of any issuer
• Made the purchase or sale based on material nonpublic information about that stock, security or issuer, and
• Did so in breach of a duty of trust or confidentiality you owed to:

• The issuer of the security
• Shareholders, or
• Any other person who is the source of the material nonpublic information.

If you have been accused of providing a tip of material nonpublic information about stocks or securities, the government must show:

• There was a communication of information
• The tip included material nonpublic information
• Providing the information was in breach of a fiduciary duty of confidentiality owed to shareholders or a duty of trust and confidence owed to the source of the information
• The breach was for the personal benefit of the tipper.

Providing such information to someone who does not otherwise have a need to know is unlawful if it is reasonably foreseeable that the communication is likely to result in illegal trading.

The U.S. Department of Justice enforces criminal securities laws and initiates grand jury investigations and criminal prosecutions when investigators believe there is evidence of fraudulent intent that can be proven beyond a reasonable doubt. An indictment may also include charges of aiding and abetting, conspiracy, obstruction of justice, and/or other related crimes.

Penalties for conviction of insider trading may include imprisonment for up to 20 years, fines of up to $5 million for an individual or $25 million for a corporate entity, and criminal forfeiture. Sentencing would be based on several factors, including the amount of the victim’s loss or the defendant’s gain from the insider trading, whether there was an organized scheme to engage in insider trading, and the defendant’s criminal record.

Insider trading charges are typically initiated by a Securities and Exchange Commission investigation. In addition to criminal charges, an SEC enforcement action may seek civil fines for up to three times the profit gained or loss avoided, forfeiture of any ill-gotten gains, and suspension or barring of the defendant from serving as an officer or director of a public company. The SEC may seek to freeze your assets shortly after bringing an enforcement action.

Additionally, the Financial Industry Regulatory Authority (FINRA), a not-for-profit organization authorized by Congress to regulate the securities industry, may bring its own disciplinary proceedings if the defendant is registered with FINRA.

How We Can Help You Fight Insider Trading Charges

If you act promptly to engage our experienced New Jersey insider trading defense attorneys before being formally charged, we may be able to have an investigation closed before an indictment is handed down and made public.

Once an indictment for insider trading has been handed down, the prosecution must prove each element of the alleged crime as outlined above, acting on or communicating material nonpublic information, breach of a duty of trust or confidentiality. Conviction also requires proof that the defendant acted with intent to deceive or knowledge of wrongdoing.

Our legal team will work to gather supporting evidence and develop a defense strategy challenging the existence of the elements of the crime of insider trading. An alternative is to demonstrate that the trading in question relied on some other basis of fact and that material nonpublic information was not a factor.

Common defenses against insider trading charges include:

• Compliance with a Rule 10b5-1 trading plan. A Rule 10b5-1 plan for trading securities is written for individuals with regular access to material nonpublic information, such as directors and officers of public companies, large stockholders, and other insiders. Establishing that a preplanned stock transaction was executed in accordance with a company’s Rule 10b5-1 plan is an affirmative defense against insider trading if the plan was written in good faith and meets rule requirements.
• Mosaic theory defense. This defense establishes that a securities transaction was based on a variety of information obtained legally from multiple sources over time instead of from a single disclosure of insider information. This requires demonstrating that, when considered on its own, each individual piece of the mosaic of information is immaterial in regard to the transaction executed.
• Good faith reliance. This defense relies on the defendant having discussed a pending stock/securities transaction with his or her attorney and then having executed it based on the attorney’s advice. The defense must show that the defendant disclosed all relevant facts and circumstances about the planned transaction to the attorney, received advice that was legal and then acted upon it. Because this defense requires waiving attorney-client privilege, its potential consequences must be carefully considered.

We can begin investigating your case immediately upon being engaged as your legal counsel. Depending on the stage of the investigation against you, we may be able to reach out to contacts with the U.S. Attorney’s Office to work to keep charges against you from being filed or to have your case directed to state court, which may be an advantage in some circumstances.

If there has been wrongdoing, we can determine whether a plea bargain to reduce charges and punishment in exchange for cooperation is in your best interests. We will advise you of any offers from prosecutors, as well as the pros and cons of agreeing to a guilty plea. Whether to accept a plea agreement is always the client’s decision to make, and we are always prepared to fight charges in court.

Contact Our New Jersey Insider Trading Defense Attorneys Today

At the first sign that you are under investigation for insider trading, engage a law firm experienced with federal white collar crimes to develop a strong legal defense for you. The New Jersey insider training attorneys of the Law Offices of Jonathan F. Marshall have the decades of experience, skills and resources necessary to protect your rights and see your case through to the best possible conclusion.

Schedule a free consultation with our respected New Jersey insider trading defense lawyers now.