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Work From Home Executives At Risk Of Insider Trading Charges

Mark Ahn had “one of the most impressive records of any white collar defendant” to come before his court, according to Judge Richard Stearns. Yet the Boston judge remarked that Ahn’s success and privilege should not be a reason to treat him differently. Ahn, a former CEO of the pharmaceutical company Galena was sentenced to 6 months in prison for insider trading while he was a consultant to Dimension Therapeutics. 

Mark Ahn had been a consultant for Abeona and Dimension Therapeutics after serving on the board of Abeona. He was convicted of trading Dimension shares after obtaining privileged information that the company might be sold to Abeona Therapeutics. Ahn was also ordered to pay a $5,500 fine and forfeiture of $49,421 that he earned through the illegal trade. Ahn had formerly fallen foul of the SEC when, as CEO of Galena, he was alleged to have secretly paid writers to mislead investors. Ahn paid $1.34 million to resolve the SEC charges. 

Though Ahn’s lawyer argued that he was a first-time offender, and that a prison sentence would be “devastating” for his children, the court didn’t spare Ahn the extent of penalties associated with an Insider Trading conviction. In cities like Boston, the life science industry is a fast-paced, small world in which it might be tempting to take advantage of privileged knowledge obtained through the grapevine. Ahn apologized for his actions saying “It was wrong for me to trade that stock at that time, and I knew it was wrong to do so.”

What is Tipping and Who is an Insider?

Insider Trading can happen when anyone gains confidential knowledge and acts on that by selling securities using “insider” knowledge. This might not even be the insider themselves but the families, partner or friends of the professional with the knowledge. As most white-collar workers have been working at home for extended periods, it’s even more likely that privileged knowledge could leak and be misused. 

There are times when this information is willfully shared with a family member or other outside person so the trade won’t be pinned on the insider. This is known as “tipping,” and is closely related to Insider Trading. However outsiders are often not aware that this information is confidential and that acting on it is illegal. If you are being investigated for Insider Trading you may be investigated by the SEC or FBI before criminal charges are brought. When Insider Trading is proved in a court of law, it also has to be proved that those making the trade knew the information was confidential, their actions were illegal and also that the information was private rather than public.

If convicted of Insider Trading you can face up to 20 years’ imprisonment for criminal securities fraud as well as a possible fine of up to $5 million for each willful violation. If you and your attorney can prove that the violation was not willful and there was no knowledge of the rule, you may escape a prison sentence but still receive serious monetary fines. The forfeiture of gains made in Mark Ahn’s trade is another common penalty. Insider Trading can also be charged along with other serious white collar criminal convictions such as wire fraud, securities fraud, obstruction of justice and tax evasion. 

The charges for Insider Trading are complex and the penalties are wide-ranging, affecting personal life, professional life, your freedom and your rights. It’s imperative that you have a skilled and hard-hitting attorney on your side who can take on your case and shield you from excessive punishments. If you are being investigated by the SEC, don’t wait for a criminal charge to be brought, contact Dhar Law, LLP. 

With nearly 8 decades of experience our highly esteemed Insider Trading attorneys are ready to assist you. We are available 24/7. Please contact us today. To learn more about our criminal defense lawyers in Boston and how we can help you, contact us now at 617 880-6155.

Photo Credit: Insider Trading by Nick Youngson CC BY-SA 3.0 Pix4free.org

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Heading up the firm, Vikas Dhar is widely recognized as a leader in the New England legal community. An accomplished business litigator and a “Top 40 Under 40” criminal defense attorney, he has also been honored as a New England Super Lawyer/Rising Star in the area of White-Collar Criminal Defense for each of the past six years by Boston Magazine.

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