§78t–1 Liability to contemporaneous traders for insider trading

Summary

Makes people who buy or sell a stock while they have important private information responsible to other people who traded the same stock at the same time on the opposite side. If you trade on inside information and someone who traded opposite you at the same time loses money, that person can sue you. The money you may have to pay can’t be more than the profit you made or the loss you avoided on those trades. Any amount you are forced to give up in an SEC court order under section 78u(d) for the same trades will reduce what you owe. Simply employing someone who did wrong does not by itself make you liable, though control persons can be held responsible under section 78t(a). If you pass along inside information, you can be sued along with the trader. Lawsuits must start within 5 years of the last trade. This does not stop other private or government actions or penalties.