Insider Trading Penalties in North Carolina

By W. James Payne Law Firm

Insider trading cases are often met with aggressive prosecution by federal authorities. By the time you are charged with this offense, the state has likely collected substantial evidence against you. Insider trading penalties in North Carolina can include life-altering consequences, including prison time, asset forfeiture, and heavy fines. Fighting these charges requires help from a North Carolina insider trading fraud attorney who can fight to clear you of wrongdoing.

Understanding the Scope of Insider Trading

Public companies rely on investors for sustainable growth. When employees and business leaders use their access to insider information to personally profit from the sale of stock, that undermines the trust that stockholders place in companies and their leaders.

In FY 2023, the SEC initiated 784 enforcement actions for a wide range of federal crimes, including 501 standalone cases directly targeting violations like insider trading. One high-profile case emerged on September 10, 2024, when the SEC filed civil charges against Philip Markin for illegal trades tied to Merck’s $1.85 billion acquisition of Pandion Therapeutics.

The information was allegedly stolen by Markin’s cousin, Seth, a former FBI trainee, who obtained confidential deal details from his girlfriend, a Covington & Burling associate working from home during the pandemic. Several individuals involved have since pleaded guilty.

The Raleigh–Durham–Cary metro area is home to roughly 4,000 tech companies employing over 60,000 professionals. Many of these businesses are publicly traded. Business districts such as Downtown Raleigh, North Hills, and Research Triangle Park are central hubs where acts of insider trading or acts that appear to involve insider trading can trigger law enforcement investigations.

From Probation to Incarceration: Understanding Insider Trading Penalties

Under 15 U.S. Code § 78ff and 18 U.S. Code § 1348, insider trading can lead to serious criminal charges when individuals knowingly use material, nonpublic information to trade securities. Federal prosecutors often pursue these cases under general securities fraud statutes.

Anyone convicted of this serious crime could face criminal penalties that could include a maximum of 20 years in prison. For individuals, the fines could be upward of $5,000,000. A business entity that engaged in insider trading could face fines of up to $25,000,000.

Since these penalties are per violation, the Department of Justice could bring multiple charges that could lead to compounded sentences. These cases are typically brought in federal court. The prosecution must show that the crime of insider trading was committed and that the defendant willfully engaged in fraudulent conduct.

In addition to civil penalties, the SEC can take action through the civil court to recover profits made or any losses that were avoided due to the unlawful activities. The SEC may also impose bans that keep the accused party from serving as an officer or director of any public company.

When Is It a Good Idea to Hire an Insider Trading Fraud Lawyer?

The decision to hire an insider trading fraud lawyer is a critical step for any defendant seeking to defend their rights. Insider trading fraud cases can lead to serious consequences that can jeopardize the freedom and future prospects of any person accused of these unlawful acts. Skilled Insider Trading lawyers can take decisive steps to position you for a favorable outcome in your case.

An attorney brings years or decades of experience understanding insider training fraud laws and how to fight the charges. Defense attorneys are adept at gathering evidence that shows that either no crime was committed or the defendant was not aware that they were breaking the law. In some cases, a plea bargain negotiation can lead to favorable outcomes that allow the defendant to put the entire ordeal behind them.

FAQs

Is Insider Trading a Crime That Can Lead to Prison Time?

Yes, insider trading is a federal crime that can lead to prison time. Anyone convicted of insider trading may face time in federal prison, depending on the severity of the offense and the amount of profit involved. The government treats these violations seriously, especially when the individual has a duty to protect confidential information.

What Are the Penalties for Insider Trading?

The penalties for insider trading may include criminal charges, prison time, heavy fines, asset forfeiture, and civil sanctions. In many cases, individuals are also barred from serving as officers or directors of public companies. Insider trading cases are often investigated by the SEC and referred to the Department of Justice for criminal prosecution, and may be considered evidence of criminal intent under North Carolina law.

How Serious Are the Consequences of Insider Trading?

In North Carolina, consequences of insider trading can be very serious, resulting in criminal and civil penalties. Criminal charges could lead to punishments that include confinement in prison. Work-related consequences could include revoked licenses and reputational damage. The SEC actively investigates and enforces these violations, and even a single illegal trade based on nonpublic information can lead to long-term consequences.

What Happens After an Insider Trading Charge Is Filed?

Once insider trading charges are filed in federal court, federal agents may take steps to freeze your assets or issue subpoenas as they prepare for trial. The government likely spent months gathering evidence before filing charges, so catching up requires quick action from a defense attorney who can review the facts of the case and begin looking for weaknesses or inconsistencies in the prosecution’s case.

Contact W. James Payne Law Firm for Skilled Insider Trading Penalties Defense

Insider trading is a serious criminal offense that carries potential consequences that can jeopardize your future and reputation. If you are facing insider trading accusations, you need legal representation in court that knows how to clear you of wrongdoing. W. James Payne Law Firm defends clients facing federal white collar charges across North Carolina.

Our lead attorney understands how to challenge the government’s evidence and protect your rights throughout the process. Whether you are under investigation or have already been charged, don’t delay securing the representation you need during this critical time. Contact our office today to speak with an attorney who brings over 40 years of experience handling insider trading cases at the federal level.