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Insider Trading Sanctions Act of 1984

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Individuals convicted of insider trading face stiff penalties.

The Securities and Exchange Commission (SEC) enacted the Insider Trading Sanctions Act of 1984 to prevent individuals with nonpublic information regarding a company from trading in that company's securities to either make a profit or avoid a loss (insider trading). The act provides stiff penalties for individuals convicted of violations.

  1. Civil Penalty

    • The Insider Trading Sanctions Act of 1984 gives the SEC authority to seek civil penalties in a United States District Court for up to three times the loss avoided or profit gained.

    Criminal Fines and Jail Time

    • Individuals found guilty of insider trading face maximum criminal fines of up to $1 million (as of 2010). Businesses found guilty face criminal fines up to $2.5 million and a maximum prison sentence of 10 years per conviction.

    Other Provisions

    • The SEC has the ability to reward informants, or "whistleblowers", who provide information or evidence on individuals or entities participating in illegal insider trading.

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