Insider trading is a type of securities fraud that occurs when confidential information is spread to shareholders so that they can take actions that are one step ahead of what is public knowledge. For example, if an investor receives confidential information that suggests the stock price of a company is going to take a hit, the shareholder will be able to sell shares before their price goes down. This is an illegal act and is heavily enforced by the Securities and Exchange Commission (SEC).
If you have been accused of insider trading in New York City, it is important that you take immediate action to adequately defend yourself. The SEC tends to punish the crime of insider trading quite severely in order to set a precedent.
Common defenses against an allegation of insider trading
As with most crimes, common defenses arise out of challenging several elements that need to be present for the act to be considered a crime. In order for an act to be the criminal offense of insider trading, there needs to have been an actual purchase or sale of securities, a sharing of confidential information and the information in question needs to have been material.
Common defenses include the argument that while material confidential information was indeed shared, the information did not result in any selling or buying of shares. Additionally, it can be possible to argue that the information shared was not “material.”
If you or your company has been accused of insider trading, it is vital that you take action to understand the law and to defend yourself adequately. An experienced attorney can provide advice and guidance on how to proceed.