What are the maximum criminal penalties for insider trading?

The maximum criminal penalties for insider trading are indeed significant, reflecting the seriousness of the offense. The correct answer indicates that an individual can face a fine of up to $5 million and a prison sentence of up to 20 years if convicted of insider trading. The high monetary penalties and lengthy prison terms serve as a deterrent against such illegal activities, which undermine fair trading practices and market integrity.

Insider trading involves buying or selling securities based on material, non-public information, which gives an unfair advantage to the trader over others who do not have access to that information. The severe penalties underscore the regulatory bodies' commitment to preserving investor confidence and maintaining a level playing field in the financial markets. The potential consequences for insider trading emphasize that the legal system aims not only to punish but also to deter future violations.

While other options present varying penalties, the distinct combination of a $5 million fine with a 20-year prison sentence highlights the legal framework established to combat insider trading most effectively.