Fort Lauderdale, FL SEC defense attorney David R. Chase talks about what must the government prove in an insider trading case. He explains that, in an insider trading case, the SEC generally must prove that an individual traded while in possession of material non-public information, meaning information obtained through an unlawful breach of fiduciary duty or similar obligation. He notes that the SEC may also pursue situations in which an individual lawfully received material non-public information but later misappropriated or misused it for personal trading purposes, such as a consultant who receives confidential company information for legitimate work purposes but then uses that information to benefit personally. Drawing on his experience investigating insider trading cases while working at the SEC, he emphasizes that these cases can be difficult to prove and that, as defense counsel, he insists that the government establish its case or at least demonstrate that it has a viable basis to do so.

He states that when representing clients who did not engage in insider trading, he may advise them to speak truthfully with the SEC and deny the allegations when that denial is accurate. In other circumstances, he may advise a client to assert the Fifth Amendment right against self-incrimination, which permits an individual to remain silent. He points out that the United States Supreme Court has made clear that the Fifth Amendment is designed not only to protect those who are guilty, but also to protect innocent individuals who have a reasonable fear of prosecution or of becoming ensnared in ambiguous circumstances.

He explains that a client who is concerned that a statement could be misunderstood, misinterpreted, or improperly used against them may constitutionally and lawfully choose to remain silent. He emphasizes that, from a strategic standpoint, exercising the Fifth Amendment prevents the SEC from relying on the client’s own statements and instead requires the agency to independently establish the elements of its case by a preponderance of the evidence. In his view, asserting the right to remain silent can therefore place the burden squarely on the SEC to prove its allegations rather than allowing the government to use the client’s words as evidence against them.