Counsel advising professional money managers on the dangers of insider trading must consider the dramatic and wide-ranging financial consequences of a criminal conviction, be it by trial verdict or plea. The government has refocused its use of the financial weapons at its disposal, and recent developments in restitution and forfeiture threaten to multiply the financial risk.
Securities fraud may give rise to at least six types of financial exposure: criminal forfeiture, a criminal fine, disgorgement to the U.S. Securities and Exchange Commission, SEC penalties, restitution to victims and private civil actions. The cumulative impact of these independent consequences can be devastating.
