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Criminal Penalties for Insider Trading
The Securities Exchange Act of 1934 grants federal prosecutors broad authority to charge individuals and entities with insider trading. The most severe criminal penalties apply when the government proves willful violation of the law.
Maximum Prison Sentences
- Individuals: Up to 20 years in federal prison
- Entities: Criminal fines only (prison for individuals involved)
Maximum Criminal Fines
- Individuals: Up to $5 million
- Entities: Up to $25 million
| Offense Level | Prison Range | Fine | Additional Consequences |
|---|---|---|---|
| Individual — Criminal | Up to 20 years | Up to $5,000,000 | Permanent securities bar |
| Entity — Criminal | N/A | Up to $25,000,000 | Deregistration |
| Individual — Civil (SEC) | N/A | Up to 3x profits | Industry bar, disgorgement |
| Tippee Liability | Up to 20 years | Up to $5,000,000 | Same as tipper |
Wire Fraud and Money Laundering Enhancement: The DOJ routinely charges insider trading defendants with additional counts of wire fraud and money laundering, each carrying up to 20 years per count. Total exposure can quickly exceed 40 years.
The 85% Rule
Federal insider trading prison sentences are governed by the 85% rule. Defendants must serve at least 85% of their imposed sentence. If sentenced to 10 years, the minimum is 8.5 years, with almost no opportunity for parole.
Collateral Consequences
Beyond prison and fines, convicted individuals face:
- Bar from serving as an officer or director of a public company
- Permanent loss of professional licenses (FINRA, SEC, state bars, CPA)
- Civil suits from harmed investors and shareholders
- Asset forfeiture of property connected to illegal trades
- Permanent reputational damage
Civil Penalties for Insider Trading
The SEC can bring civil enforcement actions with:
- Injunctions freezing assets or restricting trading activities
- Civil fines up to three times the profit gained or loss avoided (treble damages)
- Disgorgement recovering all profits from illegal trades
- Bar orders banning individuals from public company officer/director roles
Civil penalties are often imposed even when no criminal charges are brought. The SEC can pursue civil sanctions even if the DOJ declines criminal prosecution, with a lower burden of proof.
Defending Against Insider Trading Charges
Defense strategies often focus on demonstrating that the information was not material or nonpublic, or that the defendant did not act with the required intent. Negotiating cooperation agreements can reduce sentencing exposure under the U.S. Sentencing Guidelines.
Reduction in pretrial jail population since NJ bail reform implementation.
Source: NJ Judiciary Annual ReportApproval rate for properly filed expungement petitions in NJ.
Source: NJ Courts Statistical ReportCommon Mistakes to Avoid
Actually Stay Silent
Most people know they have the right to remain silent but still talk to police. Anything you say can and will be used against you. Politely decline to answer questions until your attorney is present.
Bail Conditions Are Enforceable
Violating bail conditions, even minor ones, can result in immediate re-arrest and make it much harder to obtain bail again. Follow every condition to the letter.
Proven Track Record
Recent Case Results
*Results may vary depending on your particular facts and legal circumstances.
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Todd Spodek
Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience to every case.
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Frequently Asked Questions
New Jersey reformed its bail system in 2017. Instead of a cash-based system, judges now use a Public Safety Assessment (PSA) to determine whether a defendant should be released pretrial. Most defendants are released with conditions, while those deemed high-risk may be detained. An experienced attorney can argue for favorable release conditions at your detention hearing.
No. You have the constitutional right to remain silent and to have an attorney present during questioning. Anything you say to police can be used against you in court. Politely invoke your rights by saying "I want to speak with my attorney before answering any questions." This cannot be held against you.
Attorney fees vary based on the complexity of the case, the charges involved, and whether the case goes to trial. At Spodek Law Group, we offer transparent pricing and flexible payment plans. We provide a free initial consultation to discuss your case and give you an honest assessment of costs. Investing in quality representation often saves far more in the long run than choosing the cheapest option.
An arraignment is your first court appearance after being charged with a crime. The judge will read the charges against you, and you'll enter a plea (usually not guilty at this stage). The judge will also set bail or release conditions. Having an attorney at your arraignment is critical, as they can advocate for favorable bail terms and begin building your defense strategy from day one.
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