Why Is Insider Trading Sometimes Civil and Sometimes Criminal?


Here’s  an easy-to-read primer by @WaltPavlo in @Forbes on the difference between civil and criminal prosecutions of insider trading: Insider Trading: Civil Or Criminal Crime?

Cuffs cash

In particular, note two observations: (1) the combination of new technology with old-fashioned mob and gang investigation tools (such as audio and video surveillance) means that developing evidence of wrongful intent is easier than in the past and (2) by anecdote, at least, civil defendants appear to be no more likely to re-offend than criminal defendants which, if supported by data, has implications for the proper exercise of prosecutorial discretion.


Federal Prosecution Of A Polygraph “Coach”

Polygraphs — so-called “lie detectors” — have always had a curious place in law, national security and employment law.  Their results are generally inadmissible in court: most courts have found, correctly, that the technology is too inexact and the science associated with interpreting the results too sketchy for the reports to be considered sound.


On the other hand, “lie detectors” have a grip on the popular imagination; intelligence agencies swear by them (although perhaps less so than in previous decades); and corporate employers sometimes look upon them wistfully, although their use in the private sector is sharply limited by the Employee Polygraph Protection Act of 1988 (“EPPA”)
29 USC §2001 et seq.; 29 CFR Part 801).  (For a more detailed discussion of EPPA, scan the Department of Labor Employment Law Guide for EPPA). 

Not surprisingly, the American Polygraph Association is squarely behind the practice.

Those considerations come to the fore in the unusual situation here where the Government prosecutes a polygraph “coach”.

One can easily criticize the “coach’s” purposes as policy matter, especially if the beneficiaries of his work are distasteful (sex offenders, for example).  Further, one who actively seeks to hide a lie on a job application for the intelligence services or law enforcement— even if it’s a lie in the course of a procedure that may be mostly voodoo — is probably not someone whose careers should advance in those agencies.

On the other hand, “obstruction” usually means hindering the federal agency’s activity, process or product.  Charging obstruction by tying it what amounts to glorified resume-fraud, however, is a use of the statute that shows how elastic its character has become.