Investors and individuals working in the financial sector would do well to keep up with recent insider trading cases. Those who are detected engaging in insider trading face severe legal and financial repercussions. Keeping track of the latest news and updates on recent insider trading cases can help investors, lawyers, and other professionals make informed decisions. This blog post will present a synopsis of recent insider trading cases, including relevant news and developments.
Recent Insider Trading Cases
The Martha Stewart Case
In the early 2000s, one of the most notable insider trading cases was Martha Stewart’s. The case revolved around Stewart’s sale of ImClone Systems Inc. stock in December 2001. Stewart was accused of illegally selling shares based on inside information she received from her broker Peter Bacanovic about the impending rejection of a key drug application.
Following a drawn-out legal process, the judge ruled that Stewart was responsible for the crimes for which he was being tried. Stewart received a sentence that included five months in prison, 2 years of supervised release, five months of home confinement, a $30,000 fine, and a $10,000 special assessment charge.
Other people involved in the case included ImClone CEO Samuel Waksal, who pleaded guilty to charges of insider trading, and Jeff Skilling, former Enron CEO, who was convicted of insider trading. Both individuals were handed prison terms by a federal judge as a result of their participation in the inquiry.
The Martha Stewart case shows how engaging in illegal activities like insider trading can lead to serious repercussions. It emphasizes staying on the right side of the law and staying away from anything that could get you in trouble.
In 2012, an American court found an Indian human being named Rajat Singh Gupta guilty of engaging in insider trading. The court found Gupta and guilty of securities fraud on three counts and conspiracy on one count in 2012. He received a two-year prison sentence and a $5 million fine.
A manager at a hedge fund named Raj Rajaratnam says that Gupta gave him access to secret information that he used to make money. By being on the boards of both Goldman Sachs and Procter & Gamble, Gupta was able to get information that was supposed to be kept secret. Someone is said to have told Rajaratnam things that could be used against Goldman Sachs and P&G.
John F. Thornton
This year, John F. Thornton, who used to be an investment banker, was found guilty of trading on inside information. Thornton admitted to two counts of securities fraud and one count of plotting to commit securities fraud. He was sent to prison for two years and had to pay a $3.6 million fine.
Doug Whitman, who runs a hedge fund and used information from Thornton to make deals, made money. Since Thornton was the managing director of the bank, he was able to find out information about the bank that was kept secret. He is said to have told Whitman private information from Goldman Sachs and Dell.
As of 2011, former hedge fund manager and an American citizen of Sri Lankan heritage Raj Rajaratnam were serving a prison sentence for insider trading. On 14 charges of securities fraud and 1 count of conspiracy to conduct securities fraud, Rajaratnam was found guilty in 2011. In addition to the $92.8 million fine, he was given an 11-year prison sentence.
Rajaratnam was accused of stock market insider trading. Rajat Gupta, John F. Thornton, and other experts were consulted for this article. Rajaratnam is suspected of engaging in insider trading with large firms including Goldman Sachs and Google.
Dr. Matthew Martoma
After a 2013 conviction for insider trading, American businessman Mathew Martoma was permanently disqualified from holding public office in his home country. Martoma was found shameful of fraud in securities on two counts and securities fraud conspiracy on one count in 2013. He was sentenced to nine years in jail and fined $9.3 million.
Insider trading is alleged to have benefited Martoma financially. Sidney Gilman and Robert Olan, among others, had confided in him on some matters. Martoma was accused of insider trading many times, most notably with Elan and Wyeth.
After his conviction for insider trading in relation to the demise of the energy firm Enron, Jeff Skilling became a public figure. Previous Enron CEO Skilling was found guilty of insider trading and securities fraud. He received a 24-year prison term and a $45 million fine from a federal court.
In this case, it was claimed that Skilling had wasted corporate money and lied to both investors and employees about the company’s financial stability. He was also accused of facilitating Enron’s dishonest accounting, which was thought to have helped the company hide billions of dollars in debt and inflate earnings unnaturally.
Evidence presented in court revealed Skilling’s unethical behavior and his role in Enron’s demise. All 19 counts of fraud, insider trading, and conspiracy against the defendant were upheld after trial. Investors and analysts were also among those he lied to, and the jury found him guilty of that as well.
Jeff Skilling was convicted of insider trading and received a 24-year sentence in 2004, and he was released after serving 12 years. It’s written into his parole agreement that he can’t take a job in banking or with a company that’s publicly traded.
In July 2020, the U.S. Securities and Exchange Commission (SEC) charged former Goldman Sachs banker Matthew Korenberg with insider trading. The SEC alleged that Korenberg used confidential information to trade in the stocks of three companies prior to the announcement of their merger and acquisition transactions.
SEC Charges Former Oracle Employees with Insider Trading
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former Oracle employee with insider trading. The SEC alleged that the former employee, Joseph Chen, traded in Oracle stock prior to the announcement of Oracle’s $10.3 billion acquisition of NetSuite, a cloud-based software company.
JPMorgan Chase Employee
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former JPMorgan Chase employee with insider trading. The SEC alleged that the former employee, John Barry, used confidential information to trade in the stocks of two companies prior to their merger and acquisition transactions.
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former Microsoft employee with insider trading. The SEC alleged that the former employee, David Liew, used confidential information to trade in the stocks of three companies prior to their merger and acquisition transactions.
Qualcomm Employee Stephen Richardson
In June 2020, the U.S. Securities and Exchange Commission (SEC) charged a former employee of Qualcomm with insider trading. The SEC alleged that the former employee, Stephen Richardson, used confidential information to trade in the stocks of three companies prior to their merger and acquisition transactions.
New Information on Insider Trading Scandals
Government initiatives to promote personal responsibility
Recently, the American government has stepped up its attempts to curb the practice of insider trading. The SEC has its insider trading unit that looks into insider trading charges. The SEC has also created a database of insider trading offenders.
Insider trading is now more severely punished as a result of a variety of government initiatives. For instance, we might broaden the scope of who can be held accountable for insider trading violations and make the penalties substantially harsher.
Software for Keeping an Eye on the Stock Market
Together with government initiatives, stock exchanges have implemented surveillance systems to curb insider trading. These programs employ complex algorithms to spot suspicious trading behavior.
Concomitantly, stock exchanges are putting in place mechanisms to track insider trading in real-time. Markets can avoid illicit activity like insider trading by keeping a close eye on all deals in real-time.
Insider trading is a very serious crime with real repercussions.
Insider trading has penalties that might include fines and even jail time. Making trades while in possession of non-public information can get you locked up, fined heavily, and even cause you to lose any profits you’ve made. If caught engaging in insider trading, one could be permanently disqualified from working in the securities sector.
The risk of civil and criminal culpability increases when insider trading is involved. The United States government has instituted multiple reforms, including enhanced enforcement efforts and the installation of surveillance technologies, to combat insider trading. Insider trading is punishable by severe monetary fines and potential jail time if found guilty. Knowing the risks and the potential outcomes if you engage in insider trading is crucial.