These days when you talk about Martha Stewart you probably also mention how she was convicted of insider trading at one point in her life. She even served some time in jail for her offense. That may be a bit of an outlier of a case, but it is still important in the grand saga of Martha Stewart. It points to the fact as well that the Securities and Exchange Commission (SEC) takes insider trading extremely seriously. They will pursue cases and crack down on those who think that they can pull one over on them.
To be completely clear, a good definition of insider trading is provided by Investopedia.com. They say essentially that insider trading is when a market participant in a security trades on knowledge that is not commonly known to the public. They are benefiting from having some kind of inside knowledge that others do not know about. This gives them an unfair leg up and ends up hurting some other investor at some point down the line.
The SEC has become increasingly intense when it comes to chasing down those who are committing the crime of insider trading. They do not want anyone to think even for a moment that they can get away with something like this. They are even going after those who have committed this crime on a small scale. They have to try to prove that no one is above this law. If you have done something that could be deemed as insider trading, you will be pursued by the Securities and Exchange Commission.
What Happens?
If you are under investigation by the SEC for insider trading you will first receive a phone call from the organization. They will call you to try to get you caught off balance and provide whatever information to them that they can possibly get out of you. You must be resistant to those calls. You have to make sure that you tell them to speak to your lawyer. Remain polite but firm in your assertion of your rights. You have those rights there to protect you against an ambush like this.
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(212) 300-5196After the phone call that you get you will receive official paperwork from the SEC in the form of a subpoena. This will tell you that you have to appear in court at a certain point in time. You must react to those pieces of paper by turning them over to your lawyer and getting his or her advice as to how you should react.
SEC Fact Finding Mission
The SEC will go on a fact-finding mission as it were to figure out what you knew about the trades that you made, when you knew those bits of information, where you found that information from, and if the public also knows the things that you know. They are also interested to see if you specifically traded on the inside knowledge that you have obtained.
Todd Spodek
Lead Attorney & Founder
Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.
You receive a letter from the SEC stating you are under investigation for securities violations based on trades you made months ago.
Should you respond to the SEC on your own?
Never respond to SEC inquiries without experienced legal counsel. Early statements can be used against you in both civil and criminal proceedings. An attorney can negotiate with investigators and protect your Fifth Amendment rights.
This is general information only. Contact us for advice specific to your situation.
The organization will collect the information that they can on you and then provide the documents that they have on you to ask you to testify about the information that they have on your specifically. They want to have you answer to the facts that they have collected on you.
