For many Wisconsin residents, insider trading is a source of confusion. This can be particularly so for those who are new to working the markets or even engaging in simple day trading. Not long ago, a post appearing in the blog for Kohn, Smith and Roth explained many of the details associated with insider trading. However, the post did not delve into the possible penalties one could incur if convicted. As a continuation of the original post, some of the most common of these penalties are discussed in the following sections.
For ease of understanding, the penalties are listed in three sections as outlined by ProCon.org.
Willful Violations: People who willfully violate any insider trading laws could incur a range of stiff penalties. These penalties include a fine of up to $5 million dollars and imprisonment for up to 20. In some cases, the federal courts may impose both fines and imprisonment. If defendants can prove they had no knowledge of the insider trading violation, they will not be sent to prison.
Filing and Documentation Failure: In this violation, documentation includes filing reports, documents and other relevant information. The penalty for such violations is $100 per day for every day failure to file continues. The money is paid in lieu of any criminal penalty. To collect, a civil lawsuit in the name of the nation may be filed.
Issuer violations: In this violation, issuers also includes directors, officers, employees, stockholders or agents of issuers. These penalties depend on several factors such as which section or subsection of the insider trading code was violated and the rank of the issuer involved. Penalties include fines of between $10,000 and $10 million.
Obviously, the federal government takes a hard stance against any activities related to insider trading. Beating a conviction under the guidance of a lawyer is an excellent way to avoid the harsh penalties associated with these types of federal crimes.
Source: ProCon.org, “Securities Exchange Act of 1934, rules, regulations, and penalties” accessed Mar. 17, 2015