Insider Trading and Fraud

Fraud is a pretty broad term. It’s also a very serious accusation. Identity theft and credit card fraud are probably what most people associate with the term, but it can encompass many other serious crimes, such as securities fraud. The most common type of securities fraud is insider trading. If you’ve been accused of illegal insider trading, the best course of action is to quickly seek counsel from an experienced fraud defense attorney. Securing good legal representation early in the process is crucial to your case.

Come to the Kentucky defense attorneys at the Carman Law Firm to discuss the charges, review the circumstances of your arrest, and make a plan for defending your rights. The founder and managing partner of our firm, Dan Carman, knows how the Kentucky criminal justice system operates and will personally handle your case each step of the way. Based in Lexington, he represents clients throughout Kentucky who find themselves on the wrong side of the law. Let him work with you to plan the aggressive defense that you will need. Use the convenient online inquiry form or call (859) 685-1055 for a free initial consultation.

According to the Securities and Exchange Commission (SEC), illegal insider trading generally refers to “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.” In other words, a person in a position of trust is not allowed to make a trade using information about a company that is not common knowledge. Tipping someone off can also be considered fraud, even if you aren’t the one technically buying or selling the security. Insider trading fundamentally undermines the integrity of the market, and therefore the SEC prioritizes the detection and prosecution of violations.

Considered a “white collar crime,” insider trading charges can be brought against any person who has potentially misappropriated and taken advantage of confidential corporate information. Common examples of plaintiffs in insider trading cases include:

  • Corporate officers, directors, and employees who trade company securities after becoming privy to confidential and significant developments
  • Friends and family members who make trade decisions using confidential information shared with them by corporate officers, directors, or employees
  • Employees of law, printing, brokerage, or banking firms who trade a corporation’s securities using information they received when providing services to the corporation
  • Government employees who use their access to information to make trading decisions.

The U.S. government has been aggressively trying to take action against offenders, even the high-profile ones. We all remember the 2004 Martha Stewart conviction. Authorities were investigating the possibility that Stewart used inside information to sell shares of a company ahead of some potentially bad press. She was actually sent to prison for lying about it, rather than for the crime itself, but her image will forever be tarnished by the accusations. In fact, lying, wiretaps, and informants are the main ways people end up being charged with insider trading.

Typically, much of the prosecution’s case will revolve around circumstantial evidence, because a paper trail does not exist. In one extreme case, a mortgage broker in an insider trading scheme ate the Post-it notes upon which he had passed stock tips. The best defense can be mounted only where the accused fully discloses all information to his or her defense lawyer. Conviction requires the government to show the purchase or sale of securities while the accused was in possession of material and nonpublic information – meaning any reasonable investor would likely consider that information when making a decision. The government also must show that there was a distinct breach of fiduciary duty. A fiduciary is a person or company that is required to act in the best financial interest of a client and is not supposed to profit off of the relationship without permission.

Conviction can mean steep fines and substantial prison time. Possible criminal penalties and sanctions include:

  • Up to 20 years in federal prison; and
  • Up to $5,000,000 in fines (individual)
  • Up to $25,000,000 in fines for non-natural persons (like corporations).

Remember that an accusation is not the same as a conviction. There are many ways defense attorneys can help.


An advocate in your corner who will thoroughly review and investigate the factual and the legal issues in your case can make all the difference. From Kentucky misdemeanors to federal charges and felonies, the Lexington-based Carman Law Firm has the knowledge and experience necessary to obtain the best possible resolution of your criminal charges. KY insider trading defense attorney Dan Carman provides aggressive representation with proven results to clients throughout the state in communities such as Richmond, Winchester, Georgetown and Nicholasville. A native of Lexington and a graduate of the University of Kentucky College of Law, Dan, a skilled criminal defense lawyer, is dedicated to helping those in his community who may find themselves struggling with serious allegations. Not all criminal charges have to end in convictions. Contact him today and tell him your side of the story. Call (859) 685-1055 or fill out this online contact form.

Attorney Dan Carman

Attorney Dan CarmanFocusing on criminal matters, Mr. Carman is admitted to practice law in all Courts of the Commonwealth of Kentucky, the United States District Courts for the Eastern and Western Districts of Kentucky, and the United States Court of Appeals, Sixth Circuit. He is a member of the American, Kentucky, and Fayette County Bar Associations. Mr. Carman also worked as a prosecutor, as well as a legal assistance attorney. Attorney Dan Carman can help you with any criminal defense matters you may need including; DUI, drug, and weapons charges, trespassing, traffic violations and more. [ Attorney Bio ]