Authorities have accused a Florida man for alleged insider trading. The man allegedly tipped of two investors about a company acquisition. The investors reportedly bought stock in the company before its $11 billion acquisition, and consequently netted more than $700,000. The man learned of the tip in his position at a Florida office of a global wealth management firm. Authorities say the investors paid him $35,000 for the tip.
Insider trading is a type of securities fraud. It typically occurs when an individual benefits from information unavailable to the public to trade stock or other securities. It is believed to hurt the average investor because it disrupts the free functioning of the market.
Notably, insider trading continues to be a high priority area for enforcement efforts by the U.S. Securities and Exchange Commission. In 2011, for example, the SEC brought 57 insider trading actions, a nearly 8% increase from the previous year. The SEC — backed by the Justice Department — has also recommended to federal judges that fraudulent brokers or firms, as well as any other offending individuals, receive longer, stricter sentences.
Both state and federal agencies may participate in enforcement efforts against insider trading, and felony charges can be brought against both individuals and corporations for these offenses. In addition, a victim who suffered investment losses due to dishonest or negligent stockbrokers may be able to hold them individually accountable through a securities fraud lawsuit.
If you are the victim of a securities fraud incident, don’t delay in consulting with an attorney. Activities suspected of violating securities laws often require time to investigate, and may require substantial evidence, inspections, and/or interviews. An attorney will be your best advocate throughout that process and help you obtain the recovery you deserve.
Source: Miami Herald, “Fla. man charged in NJ with securities fraud,” Jan. 25, 2013