“White Collar Crime” encompasses a variety of fraudulent criminal activity usually related to violations of financial and banking laws, regulations and rules.
These issues involve arise at both the state and federal levels, although federal white collar cases tend to garner more press and publicity. With the advent of new technology, criminals can commit financial frauds through the internet, phone and networks.
Crossing state lines brings these activities within the purview of federal law and authorities. Federal white collar crimes include embezzlement, forgery, currency speculation schemes, bribery and kickbacks, insurance fraud, money laundering, racketeering, tax evasion, securities fraud and insider trading.
Insider trading in particular is a well-known and highly publicized crime that has seen many bankers and financial executives pay hefty civil fines through the Securities and Exchange Commission, and serve many years in prison after conviction by the Department of Justice.
Insider trading is the use of confidential, nonpublic and material information to trade shares of publicly held entities. Insider trading, like many securities violations and crimes, is governed by the Securities and Exchange Act of 1934, as well as relevant regulations implemented under the law.
The Case of Mathew Martoma
Among the many high-profile insider trading cases in recent years, especially since the financial meltdown in 2007-2008, a particularly recent and interesting case is the prosecution of Mathew Martoma, a former SAC Capital Advisors hedge fund portfolio manager.
Prosecutors have called this case the “biggest insider trading scheme in history.” Mr. Martoma is under criminal indictment for trading securities on the basis of advanced notice of the failure of a drug meant to combat Alzheimer’s Disease.
Martoma is alleged to have obtained information as to the drug’s failure to perform in trial tests, and his firm consequently sold the stock in order to avoid taking losses when the stock would drop in value in light of the failed tests.
SAC Capital avoided these losses and made significant gains (of about $276 million) in the process. The government argues that Mr. Martoma became privy to confidential information initially presented at a meeting among doctors and medical experts, and that this gave him the inside edge to dump the pharmaceutical stock.
The evidence the government will lay out includes emails setting up a meeting between Mr. Martoma and one of the doctors present at the confidential presentation in which the drug’s failure was discussed.
This meeting apparently occurred a day before the announcement of the clinical trial results. It remains to be seen how this trial will pan out, but the allegations make no bones about it: the government believes the defendant participated in illegal insider trading.
Get Legal Help from an Experienced Miami White Collar Criminal Attorney
It is vital for any individual, either as an experienced broker, or as an at-home trader, to understand the details of federal securities laws and the specifics of what it means to insider trade.
In many situations an individual is fully knowledgeable of what they are doing, but others may not realize the nature of information they receive or that acting on such information is illegal, both civilly and criminally.
This is a tricky area of law, and everyone must be well aware of applicable securities laws.
If you are accused, arrested or being questions for federal securities fraud call the Law Office of Paul J Donnelly at 305-757-3331 we are experienced Miami white collar criminal defense attorneys and can help.