The Securities and Exchange Board of India (SEBI) is accusing three entities of insider trading. How were the entities linked together? Facebook “likes.”
Yes, that’s right.
Apparently, the wives of two company owners regularly “liked” one another’s photos on Facebook. SEBI sees the “likes” as evidence of frequent interaction or communication, which is a violation of protocol in insider trading cases. The board assumes the wives have access to sensitive trading information through their social media connection. However, the wives have denied allegations of insider trading, saying only that they are socially acquainted.
Is this a practice that would hold up in U.S. courts? How serious is an insider trading investigation or charge?
Below, we’re going to detail the SEC’s definition of insider trading and explain why you need to get legal help right away if you are in their crosshairs.
Understanding U.S. Insider Trading Laws
The courts may open a Pandora’s box of problems based on the rulings in the above case. Critics say that social media connections cannot be used to file charges and that the wives’ privacy may have been violated.
The Security and Exchange Commission (SEC) in the United States has its own protocol in insider trading cases. Their definition includes both lawful and unlawful acts.
Lawful insider trading is when employees, directors and officers of a company buy or sell stock in their own companies. These trades must be reported to the SEC.
The SEC defines unlawful insider trading as such:
“…buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.”
This is a type of fraud that may involve inappropriate tips and misappropriation of private information. The unfair advantage makes the practice illegal.
Many different types of people have been prosecuted for fraud under SEC regulations. Cases have been brought against the following types of people:
- Members of a company or organization who purchase securities
- Associates who conduct business with those company members
- Relatives, friends, and acquaintances of company members
- Government employees or officials
- Hackers or thieves who access private information
The SEC is vigilant about prosecuting violations to maintain the integrity of U.S. financial markets. When investigating an individual for fraud, they typically leave no stone unturned in their pursuit of evidence.
If You Are Facing Insider Trading Charges
If you are embroiled in an investigation by the SEC, they may look at your social media accounts to find evidence of unlawful activity. It’s hard to say whether Facebook “likes” would be enough to constitute charges in a U.S. case, but you can never be too careful.
Your best chance at protecting your rights and reaching a positive outcome is to enlist the skills and knowledge of a Chicago white collar crime lawyer to defend you.
A good criminal attorney will understand the complex differences between legal and illegal insider trading, and which defenses may work in your case. You will need guidance to get through the investigation, and an experienced lawyer will coach you on what to say and what not to say, as well as which files and accounts are protected.
Penalties could involve a long prison sentence and steep fines, so don’t go down without a fight. Secure the help of a seasoned Illinois defense attorney to aggressively fight your charges. Call today for your free case review.
About the Author
Sami Azhari has been working as a lawyer since 2007, after receiving his Juris Doctor from the Michigan State University College of Law. He has handled numerous state and federal cases, and is known throughout the Chicago and Rolling Meadows area for providing his clients with high-quality, skilled representation. He has been recognized by SuperLawyers, the National Trial Lawyers Association, and other notable organizations, and has spoken at a number of legal conferences.