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Insider trading is the flavor of the month in the Southern District of New York.  In addition to the highly publicized trials in the summer of 2012, the U. S. Attorney’s Office continues to investigate and prosecute lesser lights, undoubtedly to convince the public that it is going after the architects of the financial crisis of 2008 by prosecuting Wall Street fraudsters, even though the recent defendants played no role in the crisis. Other USAOs  such as the Eastern District and the District of New Jersey are grabbing whatever insider trading cases they can.  These cases are investigated by the SEC and the FBI.  The juicier ones charge mega-hedge funds with  trading on inside information.  The SEC has a long tradition, reaching back to the early 70’s, of referring its major cases to the SDNY.  Thus, the Southern District is the epicenter of large insider trading cases.

A New York White Collar Crime Lawyer will help you sort out the facts and provide representation

Inside information is essentially non-public information leaked by insiders such as employees or board members of companies.  A typical example is the passing along of earnings projections by someone in a company having access to such information, usually someone in finance or having access to the information through a colleague in finance.  When the Street is predicting earnings that are substantially lower or higher than the actual internal projections, someone with inside information can turn it into real money by selling it to a hedge fund or other institutional investor, which in turn will either buy or sell short the shares of the company about which the insider information was leaked.  The sentencing guideline range in insider trading cases is driven by the losses incurred by other  shareholders or the profits made by the tippee.  The sentencing exposure for  both the tippee and the tippor can be huge, depending on the size of the trade.   

Contact Our New York Criminal Defense Attorney immediately to get the legal advice you need

The prime targets in insider trading cases are the tippees, but the tippors can find themselves in big trouble too.  As a rule, the  FBI and the USAO will try to turn the tippors into government witnesses against the tippees.  In return for their cooperation, the tippers can frequently avoid a heavy prison sentence or, in some cases, prison at all.

The defenses in insider trading cases against tippers are typically  (1) the tipper was not the source of the information and the circumstantial evidence, such as phone logs, is inconclusive, and (2) the information was public in nature.  The question of whether information is inside information is sometimes unclear. For example, earnings projections are sometimes public information, and even though the tippor got his information from an insider, it is not necessarily non-public insider information.  The same is the case with respect to information concerning corporate takeover as.  Thus, the first order of business for a criminal defense lawyer investigating an insider trading case on behalf of a client is to read the financial media at the time of the trades to see what information was public at the time.

Only a handful of lawyers have had experience with insider trading cases.  If you find yourself on the wrong side of an insider trading complaint or indictment, please call Jonathan Marks, who has had considerable experience in this area.  He will be able to help you.

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