SIE practice questionmediumInsider Trading
Under the Insider Trading Sanctions Act, the SEC can seek civil penalties of up to how many times the profit gained or loss avoided through insider trading?
- AFive times
- BThree times✓ Correct answer
- CTwo times
- DOne time
Explanation
Why B — Three times
The Insider Trading Sanctions Act of 1984 (and enhanced by the Insider Trading and Securities Fraud Enforcement Act of 1988) allows the SEC to seek civil penalties of up to three times the profit gained or loss avoided (treble damages). This is in addition to disgorgement of the actual profits. Criminal penalties can also apply, with fines up to $5 million for individuals and $25 million for entities, plus imprisonment of up to 20 years.
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