Recently, the Connecticut-based hedge fund company SAC Capital Advisors pled not guilty to fraud in federal court in Manhattan, despite the prosecution’s assertion that it had a large amount of incriminating evidence in its possession. Prosecutors alleged that they had things such as instant messages, electronic messages, court-ordered wiretaps, and recordings made consensually in their possession, which led to them charging the hedge fund with the felony of fraud. Specifically, the company is accused of wire and securities fraud, otherwise known as insider trading. The company is accused of creating an atmosphere that encouraged this kind of criminal activity. The company has announced that it will continue normal operations, and denied the charges against it.
Insider trading occurs when persons entrusted with inside information regarding a company trades on that information in violation of a trust or duty. Thus, the person gains an unfair advantage on the stock market by making trades based on confidential information, and makes money illegally. Penalties for this offense may include jail time, fines, and the payment of restitution to the victims.
In this particular case, the allegations of insider trading could topple the company, which at one point managed $15 billion in assets. In addition to the fraud charges, there is the issue of whether or not the companies managed by the hedge fund would be harmed by the prosecution, something the government prosecutors are working to address. This problem illustrates that white collar crimes such as insider trading can cause great harm to the financial well-being of the victims.
Anyone accused of a white collar crime such as insider trading or securities fraud is entitled to a vigorous criminal defense. The defendants in these cases have the legal right to dispute the admissibility of evidence, question the state’s witnesses, and challenge the constitutionality of the court’s proceedings. Anyone accused of a white collar crime has the ability and right to defend themselves in a court of law and win a legal vindication of their innocence.
Source: Connecticut Post, “Hedge fund pleads not guilty to US fraud charges,” Tom Hays, July 26, 2013.