New York Insider Trading Laws & Charges + Statute Of Limitations

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Insider trading in New York applies to the trading of stocks or other securities within a company by individuals who have access to non-public or confidential information about the company in question. Taking advantage of privileged information or access to additional information can be deemed as a breach of the fiduciary duty of the individual in some cases.

In recent years, federal and New York state law enforcement officers have made various prosecutions regarding securities and insider trading a priority. Today individuals are being targeted, as well as corporations, small businesses, professionals, and families who might obtain non-public information and use that information unfairly for their own benefit.

Laws and Penalties

Today, almost anyone can be the subject of a federal investigation into insider trading. Insider trading is regarded as a significant New York white collar crime which is capable of receiving serious penalties in the eyes of the law. From district court judges, to magistrate judges and individuals, allegations of greed through insider trading are processed to the full extent of the law, and over the past decade, the federal government has increased insider trading prosecutions significantly.

A conviction of insider trading can severely alter your life, even if you simply give friends or family members tips using privileged information that you shouldn’t have. A conviction of insider trading can lead to serious jail time, large monetary fines, and the requirement to repay any money that was fraudulently obtained in the trade.

In some cases, it is possible for issues of insider trading to be handled through a civil process, which does not lead to any criminal conviction or prison time, and this is a process that takes place through administrative talks with the Securities and Exchange Commission. In these circumstances, the penalties may include debarment, fines, and restitution. Usually, however, because insider trading is prosecuted on a federal level through the securities fraud statute, it can result in significant fines and some prison time.

The prison times that are currently in use for penalties of insider trading are getting significantly longer. In 2011, the median jail term for insider trading reached thirty months. Corporations involved with insider trading can be fined up to $25 million, and according to the Securities Exchange Act, defendants can be charged with up to twenty years in prison for each violation of insider trading fraud.
In some cases, people charged with insider trading are also charged with mail and wire fraud, which can lead to an additional twenty-year sentence. Further aggravating circumstances, such as obstruction of justice, racketeering, and tax evasion may also be taken into consideration.

Insider Trading Defenses

It is possible to be convicted of insider trading for a variety of reasons, but there are instances in which you can defend yourself against the conviction with the help of an attorney. For example, if your attorney can prove that you had no idea that you were using information in a trade that was privileged information, then you should be able to avoid prosecution in an insider trading case.

What’s more, it’s worth noting that most insider trading cases consist of a great amount of focus on circumstantial evidence and the failure of a prosecutor to establish one of those elements can quickly result in a case being dismissed. Insider trading can be defined as someone selling or purchasing securities while in the possession of non-public information, but it is difficult to prove that someone knew the information they were using was privileged.

What’s more, trading by specific insiders can be allowed in some cases so long as it does not rely on material information that does not exist within the public domain of knowledge. A number of jurisdictions require that trading on this level should be reported so that all transactions can be monitored.

Statute of Limitations

As with many crimes in New York, a statute of limitations applies to the act of insider trading. The Securities Exchange Act that was created in 1934 dictates that the statute of limitations for this particular crime will begin more than two years after the date that profits from the insider trading action have been recognized. From that point, the statute of limitations has been extended to six years in New York. Following six years of the realization of profits from an insider trading set of circumstances, it is not possible to charge someone for this particular crime. However, it is sometimes possible to extend the statute of limitations for certain reasons.

New York Insider Trading Cases

Geoffrey Nathan, Esq.

About Geoffrey Nathan, Esq.

Geoffrey G Nathan is a top federal crimes lawyer and Chief Editor of FederalCharges.com. He is a licensed attorney in the Commonwealth of Massachusetts since 1988, admitted to practice in both Federal and State courts. If you have questions about your federal case he can help by calling 877.472.5775.