Insider Trading Defense in Seattle

Insider trading is a serious offense, often resulting in investor losses, criminal charges, and hefty penalties. If you or someone you know is facing insider trading charges in Washington State, turn to Jennifer Horwitz Law.

Lead attorney Jennifer Horwitz has comprehensive knowledge of the applicable federal and state securities laws and will leverage her skills and experience to protect your rights, reputation, and future. Call today to get started with an experienced Seattle insider trading attorney. 

What Is Insider Trading?

Insider trading involves buying or selling a public company’s stock based on non-public, material information about that company. Because all investors should have equal access to the same information, acting on private, critical information gives an unfair advantage.

However, not all insider trading is illegal. Legal insider trading happens when corporate insiders—like executives or employees—buy or sell stocks while following the rules set by the SEC. It becomes illegal when these individuals trade based on undisclosed information.

Examples of Legal Insider Trading 

  • An executive purchases shares of their company after a public announcement of positive earnings. They follow all SEC rules and regulations, disclosing their trades and ensuring no non-public information influences their decision.
  • A board member sells shares of her company stock only after ensuring that she has no undisclosed material information and after filing the necessary paperwork with the SEC.

Examples of Illegal Insider Trading

  • A manager learns in an internal meeting that the company will soon announce a groundbreaking product. He quickly buys shares before the public announcement, aiming to profit from the subsequent stock price rise.
  • An employee overhears a conversation about a potential merger or acquisition and decides to buy shares in the company that is about to be acquired, knowing the stock price will likely increase once the news becomes public.
  • A friend of a company’s executive is tipped off about negative financial results before they are publicly disclosed. Using this information, the friend sells all their shares to avoid losses when the stock price drops after the announcement.

Understanding these distinctions and examples is critical for anyone involved in stock trading or corporate activities. It ensures that they remain within legal boundaries and avoid inadvertent violations.

Laws Governing Insider Trading

The Securities Exchange Act of 1934: Rule 10b-5 is at the core of the regulations. This rule prohibits fraudulent acts or activities that involve the purchase or sale of securities. Within this ambit, insider trading is unlawful based on undisclosed material information.

Besides federal law, specific SEC rules guide and regulate insider actions, ensuring fair play in the market. The SEC closely monitors the trading habits of corporate insiders to prevent any illegal activity.

Washington State’s insider trading law prohibits business development companies from being a party to or engaging in an insider transaction unless the board of directors approves or ratifies such transactions. A business development company is a financial institution, including banks, thrifts, credit unions, venture capitalists, and private entrepreneurs.

The interplay of federal and state law governing insider trading makes having an experienced Seattle white-collar crimes attorney essential. That’s where Jennifer Horwitz Law comes in. Jeniffer Horwitz has extensive experience handling insider trading cases, and she is comfortable in federal and state courts

Common Misconceptions about Insider Trading

Contrary to popular belief, not every act of trading by corporate insiders is illegal. For instance:

  • Even if that news hasn’t hit the mainstream, trading based on publicly available news or trends is not considered insider trading.
  • An executive buying or selling their company’s stock after public disclosure of financial results is also not illegal if done following specific protocols.

Misconceptions can be dangerous, leading to unintentional violations or unwarranted worries.

The Consequences of Insider Trading

If found guilty of insider trading, the implications can be severe. On the legal front, you may face both criminal and civil penalties. Criminal charges for a white-collar crime can lead to substantial fines and even imprisonment. The SEC can also impose significant civil penalties and disgorgement (repaying the investor losses). 

The reputational damage is profound. The stain of insider trading allegations can linger, closing doors to future opportunities. Working with an experienced insider trading lawyer is essential, given the lasting implications.

Talk To An Experienced Seattle Insider Trading Attorney

If you face insider trading allegations, time is of the essence. Trust Jennifer Horwitz to work closely with you, explore all potential defenses, and keep you informed at every step. She understands the nuances of insider trading laws at the federal and state levels and is well-prepared to provide the guidance and defense you need. Call for a comprehensive consultation and to safeguard your professional future.