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If you or someone you know has been accused of insider trading, it is in your best interest to retain the services of an insider trading lawyer to avoid unfavorable judgments. Lowther | Walker’s insider trading defense attorneys hold over 20 years of experience representing clients in white-collar cases throughout the country.
Schedule a confidential consultation at any time, 24/7 to speak with our federal defense attorneys.
No-obligation. Fully confidential.
Call Us Today: (404) 496-4052
Declined Medicare Fraud Prosecution When the government alleges $100 million in fraudulent Medicare reimbursements, the stakes are undeniably high. Recently, our firm successfully represented the former director of a national laboratory targeted by federal authorities […]
Fraud Charges Dismissed In US v. J.C., the DOJ targeted our client, a public official, for their alleged involvement in a conspiracy to fraudulently obtain over $1 million in pandemic subsidies and loans. We dismantled […]
Investigation terminated; no prosecution. DOJ notified our client that she was the target of a multi-million-dollar public corruption, money-laundering, and tax-fraud investigation that the FBI and IRS-CI were conducting. The client’s former attorney had arranged […]
The FDIC-OIG, the HUD-OIG, and the FHFA-OIG investigated our client, a real-estate broker, for Mail Fraud, Wire Fraud, and Bank Fraud, based on the client’s allegedly conspiring to obtain $1.7 million in fraudulent mortgage loans […]
The HSI and the FBI investigated our client, a member of the activist collective Anonymous, for Computer Fraud, based on the client’s allegedly participating in a distributed denial of service (“DDOS”) attack on a corporate […]
Declined Medicare Fraud Prosecution When the government alleges $100 million in fraudulent Medicare reimbursements, the stakes are undeniably high. Recently, our firm successfully represented the former director of a national laboratory targeted by federal authorities […]
Fraud Charges Dismissed In US v. J.C., the DOJ targeted our client, a public official, for their alleged involvement in a conspiracy to fraudulently obtain over $1 million in pandemic subsidies and loans. We dismantled […]
Investigation terminated; no prosecution. DOJ notified our client that she was the target of a multi-million-dollar public corruption, money-laundering, and tax-fraud investigation that the FBI and IRS-CI were conducting. The client’s former attorney had arranged […]
The FDIC-OIG, the HUD-OIG, and the FHFA-OIG investigated our client, a real-estate broker, for Mail Fraud, Wire Fraud, and Bank Fraud, based on the client’s allegedly conspiring to obtain $1.7 million in fraudulent mortgage loans […]
The HSI and the FBI investigated our client, a member of the activist collective Anonymous, for Computer Fraud, based on the client’s allegedly participating in a distributed denial of service (“DDOS”) attack on a corporate […]
Insider trading headlines make national news every few months. But company owners, executives, or professional advisors being accused of insider trading outside the public eye is more common than many think.
The first step to understanding insider trading laws is to learn what the law allows and prohibits, as well as understanding the insider trading violations and defenses important to your case.
Lowther | Walker’s insider trading attorneys hold decades of experience defending clients in SEC insider trading investigations. We handle cases with discretion and with the ultimate objective of safeguarding your freedom and professional reputation.
Insider trading is committed when the following four elements of a crime are met:
Insider trading occurs when someone receives investment information that is unavailable to the public and buys or sells based on said information.
A person facing insider trading accusations may face parallel lawsuits from both the SEC, or Securities and Exchange Commission, and the U.S. Attorney’s Office. Lowther | Walker’s insider trading lawyers handle federal-level cases and will answer any questions you may have about your case.
If you’re facing allegations of insider trading or work in a position where securities regulations affect your daily activities, having an experienced insider trading attorney is essential. These cases involve complex federal securities laws with severe penalties, including substantial fines and imprisonment. An attorney who specializes in this area understands the nuances of securities regulation and can protect your rights while navigating investigations by the SEC or Department of Justice.
Here’s why you need specialized legal representation:
These are the primary federal provisions prohibiting insider trading, and convictions can result in up to 20 years’ imprisonment and fines up to $5 million for individuals.
The SEC can seek civil penalties up to three times the profit gained or loss avoided, making the financial consequences devastating even without criminal charges.
An experienced attorney can communicate with investigators during the preliminary stages, potentially resolving matters before formal charges under federal securities laws are brought.
Corporate insiders can be required to disgorge profits from trades within six-month periods regardless of intent, and an attorney can help you navigate these complex timing rules.
Prosecutors must prove you traded on material, nonpublic information while aware of a fiduciary duty, and an attorney experienced in securities law can challenge the government’s case on technical grounds that a general criminal defense lawyer might miss.
The first clue that you or your company may be under investigation for insider trading is initial contact in the form of a phone call or a visit from an attorney representing the SEC. Initially, this attorney will ask questions about trading activities. Answering these questions is voluntary at this point, and it is highly advisable not to answer any questions without your lawyer present. Any questions you may answer could be misconstrued and used against you in a court of law. The best course of action is to decline to answer any questions and immediately contact an experienced insider trading lawyer to reschedule the interview when you have proper representation working in your best interest.
| Penalty Category | Prosecuting Agency | Applicable Parties | Details & Maximum Sanctions |
| Federal Imprisonment | Department of Justice (DOJ) | Individuals |
• Up to 20 years per count (Securities Exchange Act) • Up to 25 years per count (Securities & Commodities Fraud) |
| Statutory Criminal Fines | Department of Justice (DOJ) | Individuals & Entities |
• Up to $5,000,000 per count (Individuals) • Up to $25,000,000 per count (Corporations & Institutional Firms) |
| Disgorgement & Restitution | SEC & DOJ | Defendants |
• Civil Disgorgement (SEC): Mandatory surrender of all illegal profits or avoided losses • Restitution (DOJ): Full financial reimbursement to cover victims’ losses |
| Treble Civil Penalties | Securities & Exchange Commission (SEC) | Defendants | Up to 3x (triple) the total profit gained or loss avoided from illicit trades |
| Industry Bars | Securities & Exchange Commission (SEC) | Securities Professionals | Permanent ban from working in the securities industry or associating with broker-dealers and investment advisers |
| Officer & Director Bars | SEC / Federal Courts | Corporate Leadership | Permanent prohibition from serving as an officer or sitting on the board of directors for any public company |
Defendants facing civil or criminal insider trading allegations from the SEC or DOJ can rely on several legal arguments to challenge the government’s case.
The trades were executed pursuant to a pre-established, written trading plan adopted in good faith before the individual acquired material nonpublic information (MNPI).
The nonpublic information in question was not significant enough that a reasonable investor would consider it important when deciding to buy or sell a security.
The trading decision was based on information that was already broadly disseminated to the public, or derived from a lawful mosaic of public data rather than illegal insider tips.
The trader obtained the information lawfully without any contractual or fiduciary obligation to keep it confidential, meaning no duty of trust was violated.
The defendant lacked the requisite criminal intent (scienter) and did not willfully, knowingly, or recklessly attempt to deceive, manipulate, or defraud the market.
If the defendant received a tip from an insider, they can argue that the original tipper did not receive a personal benefit for sharing the information, or that the tippee did not know the information resulted from a breached duty.
The most important step you could take when contacted by the SEC or the Attorney General’s office is to retain the services of an insider trading lawyer to work on your behalf.
Contact our office today to speak with one of our insider trading lawyers.
No-obligation. Fully confidential.
Call Us Today: (404) 496-4052
Insider trading is primarily prosecuted under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, which prohibit fraudulent practices in securities trading. Criminal prosecutions also rely on 15 U.S.C. § 78ff for willful violations, and 18 U.S.C. § 1348 (securities fraud). The wire fraud statute (18 U.S.C. § 1343) and mail fraud statute (18 U.S.C. § 1341) are frequently used as alternative charges when communications or mail were used to execute trades.
Under Section 32(a) of the Securities Exchange Act, individuals face up to 20 years imprisonment and fines up to $5 million per violation. If prosecuted under wire or mail fraud statutes, defendants face up to 20 years per count. The Sarbanes-Oxley Act increased maximum prison sentences from 10 to 20 years for securities fraud violations, reflecting the serious nature of these crimes.
The SEC can seek civil penalties under the Insider Trading Sanctions Act (ITSA) and Insider Trading and Securities Fraud Enforcement Act (ITSFEA) of up to three times the profit gained or loss avoided. Additionally, the SEC can seek disgorgement of all ill-gotten gains plus prejudgment interest, injunctions against future violations, and officer-and-director bars preventing individuals from serving in corporate leadership positions.
The SEC uses sophisticated market surveillance systems that flag unusual trading patterns, particularly trades executed shortly before major announcements like mergers, earnings releases, or FDA approvals. The agency also receives tips through its whistleblower program (which can award 10-30% of sanctions exceeding $1 million), monitors Forms 4 and 5 filed by corporate insiders, and receives referrals from FINRA and stock exchanges.
Investigations typically begin with the SEC identifying suspicious trading patterns and issuing informal inquiries to brokerage firms for trading records. The SEC may then issue a formal order of investigation, authorizing subpoenas for phone records, emails, and testimony. If evidence supports violations, the SEC refers criminal cases to the U.S. Attorney’s Office and the FBI. Federal prosecutors may then present evidence to a grand jury, which can issue indictments. Parallel civil and criminal investigations often proceed simultaneously.
The SEC can issue subpoenas for documents, trading records, emails, and testimony under oath. Federal prosecutors can obtain wiretaps under Title III when investigating securities fraud, search warrants for electronic devices and documents, and grand jury subpoenas. Investigators analyze phone records (including “burner” phones), conduct forensic examination of computers and messaging apps, interview witnesses, and may use cooperating witnesses wearing recording devices.
The classical theory applies when corporate insiders (officers, directors, employees) breach fiduciary duties to shareholders by trading on confidential information. The misappropriation theory, upheld in United States v. O’Hagan (1997), applies when someone breaches a duty of trust and confidence to the source of the information—such as a lawyer trading on a client’s confidential merger plans. Both theories can support criminal prosecution under Rule 10b-5.
Common defenses include:
Under Dirks v. SEC (1983) and refined in Salman v. United States (2016), a “tipper” can be prosecuted even without trading if they disclose material nonpublic information to someone who trades, and the tipper receives a personal benefit (which can include reputational benefit or a gift to a friend or relative). The “tippee” is liable if they knew or should have known the information was disclosed in breach of duty. Both can face the same penalties as if they traded directly.
For criminal prosecution, the statute of limitations is generally 5 years under 18 U.S.C. § 3282. However, the clock may be extended if the defendant is outside the United States or if the indictment is sealed. For SEC civil enforcement, the limitation period is 5 years under 28 U.S.C. § 2462. The SEC can also seek equitable relief (like injunctions) beyond the 5-year period if there’s ongoing or future harm, though monetary penalties are time-barred after 5 years from the violation.
