Insider Trading Ring Draws New Guilty Pleas

Last year, the business world was rocked by the news that more than seven individuals stole over 5 million dollars in illicit funds, by means of an insider trading ring that spanned across the country. The alleged trading ring, run by a former Bank of America employee named Daniel Rivas, first came to national attention in August 2017, when the Justice Department and Securities Exchange Commission (SEC) filed formal charges against members of the group. As the case has progressed, both Daniel Rivas and James Moodhe have now pled guilty – and the rest have now officially entered pleas, as recently as last month. Of the seven, only one defendant has pled not guilty: ex-Morgan Stanley broker Michael Siva.

This case is notable among white collar crime cases, not just for the sheer breadth of the insider trading charges, but for the difficult questions it raises about trading laws and regulations. At Brad Bailey Law, our Boston white collar crime defense attorneys have successfully defended dozens of our clients’ reputations against overzealous prosecutors. In this post, we’ll discuss some of the questions raised by the Daniel Rivas insider trading ring case.

What Constitutes Insider Trading, and What Penalties Does It Carry?

Insider trading is a federal crime, and it is considered to be a “white collar crime,” meaning that it is primarily perpetrated by skilled businessmen and women. Due to the high profile nature of these cases, prosecutors routinely attempt to make examples of insider traders, even when the charges are not clear. According to the SEC, insider trading can be charged when a defendant buys or sells confidential information about a business decision. This can include anything from sharing the proceeds after prematurely selling a stock, to revealing nonpublic information about mergers and other business arrangements for a price.

In the Daniel Rivas trading ring, however, the defendants were charged on the basis of three discovered “tipping chains.” A tipping chain, as established in previous Supreme Court decision Salman v. United States, means that the person providing the tip (or tipper) received a benefit of some kind from their tippee, whether pecuniary or otherwise. The “otherwise” in this equation can be incredibly subjective: Even the warm feelings brought by gift-giving to family or friends are now considered proof that insider trading took place.

An insider trading charge carries serious penalties for those convicted. Given the seriousness of the consequences, the ruling that tippees can provide a non-pecuniary benefit to tippers makes it all the more important to exercise caution when discussing business matters. Like some of the defendants in the Daniel Rivas case, you may not realize that your actions constitute insider trading. In spite of your best intentions, the SEC and the Justice Department could take a very different view.

Common penalties for an insider training conviction include:

  • Millions of dollars in fines
  • More than 20 years of jail time
  • Additional “treble” damages for deliberate wrongdoing

Protect Yourself and Your Reputation. Contact our Boston Insider Trading Defense Attorneys.

What may seem like a sound business decision can end in tragedy, as seen in the Daniel Rivas insider trading ring example. If you’re accused of insider trading charges, you should seek legal counsel well-versed in this complex area of the law. Our attorney Brad Bailey has handled many insider trading cases, including the high profile case titled United States v. Karunatilaka. Brad and his team are ready to provide a confidential phone consultation when you need assistance.

Contact us today if you believe you may have committed insider trading, or if you are suspected of selling confidential information. Our Boston white collar crime defense team can help you prepare a strong defense.

Related Posts
  • What Is Considered Insider Trading? Read More
  • Child Pornography Charges: State or Federal Crime? Read More
  • Are Federal Charges More Serious Than State Charges Read More