Insider trading — the act of buying or selling securities based on material, non-public information — remains one of the most high-profile and damaging violations in the world of finance. While it is aggressively pursued by regulators like the SEC and FINRA, some major cases have still managed to unfold, leading to shocking revelations, criminal convictions, and lasting impacts on the financial world. Below, we explore some of the most significant insider trading scandals in history.
1. Ivan Boesky – The Blueprint of Greed (1986)
Ivan Boesky, once a revered Wall Street arbitrageur, became the face of insider trading in the 1980s. He amassed over \$200 million in profits through illegal stock trades based on confidential information he obtained from investment bankers and insiders. His case was pivotal in exposing the deep web of corruption on Wall Street and led to the downfall of financier Michael Milken. Boesky ultimately cooperated with federal investigators, serving a three-year prison sentence and paying a \$100 million fine.
2. Raj Rajaratnam – Galleon Group Hedge Fund (2009)
Founder of the Galleon Group, Raj Rajaratnam orchestrated one of the largest insider trading rings ever uncovered. Using a vast network of corporate insiders, Rajaratnam secured confidential information from executives at companies like Intel, IBM, and McKinsey & Company. In total, he and his associates reaped \$70 million in illegal gains. The case was notable for its use of wiretaps, a technique rarely seen in white-collar investigations at the time. In 2011, Rajaratnam was sentenced to 11 years in prison.
3. Martha Stewart – ImClone Systems (2001)
Celebrity entrepreneur Martha Stewart became involved in an insider trading case after she sold nearly 4,000 shares of ImClone Systems just before the FDA rejected its cancer drug. Although she was not convicted of insider trading, Stewart was found guilty of obstruction of justice and making false statements to federal investigators. She served five months in prison. The case drew national attention and showed how insider trading could extend beyond Wall Street elites to cultural icons.
4. Jeffrey Skilling – Enron Scandal (2001)
Jeffrey Skilling, Enron's CEO, played a central role in the company’s fraudulent manipulation of its financial statements. Before the energy giant collapsed, Skilling sold about \$60 million in stock based on inside knowledge of Enron's impending bankruptcy. His actions were part of a broader scheme of corporate fraud and deception. In 2006, Skilling was convicted on multiple counts of fraud and insider trading and sentenced to 24 years in prison (later reduced to 14).
5. R. Foster Winans – The Wall Street Journal Leak (1985)
R. Foster Winans, a reporter for The Wall Street Journal, leaked upcoming stories from his "Heard on the Street" column to stockbrokers, who then made profitable trades before the information went public. This relatively simple but impactful scheme generated thousands in profits and marked one of the first major examples of media-related insider trading. Winans was convicted and sentenced to 18 months in prison.
6. Sam Waksal – ImClone Systems CEO (2001)
While Martha Stewart’s name is often associated with ImClone, Sam Waksal, the company’s CEO, was the central figure. Waksal tried to sell his family’s shares and tipped off others just before the FDA’s negative decision on the cancer drug Erbitux became public. His actions led to a seven-year prison sentence, setting the stage for the scrutiny that later fell on Stewart.
7. Steven A. Cohen – SAC Capital Advisors (2013)
Steven A. Cohen, one of the most successful hedge fund managers in history, ran SAC Capital, which was fined \$1.8 billion for insider trading. Though Cohen himself was never criminally charged, eight employees of SAC were convicted. The firm was forced to shut down its investment advisory operations. The case revealed how deeply embedded insider trading can be in high-frequency, institutional investing.