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Op-Ed: Your husband commits insider trading — Now what?

By Anna Timone     Apr 24, 2013 in Business
There could be a bull market for divorce lawyers from marriages falling apart due to financial fraud or insider trading by a spouse.
Most of the time the husband is the one committing fraud and the wife is either a victim or left with damages or even both.
New York is now a no-fault state for divorce. The wife of a husband who has committed insider trading can move forward to end the marriage based on no fault grounds. Before the change in law, insider trading would most likely not have qualified as sufficient action for a divorce. To end a marriage based only on that would have almost surely required a long trial that would have been costly in every meaning of the word, ranging from expensive lawyer, splitting up martial assets and to the trauma of children having to testify.
But that impediment is now gone.
By abolishing the requirement to prove fault or reason for divorce, divorcing couples and the courts will no longer have to waste resources deciding and litigating whether a marriage should end. Instead, almost ex’s and courts will devote resources to issues such as the welfare of the children, fair division of marital assets and other economic concerns. The no-fault divorce law gives green light to recently divorced couples to quickly move on with their lives and allows them to return to healthy emotional state of mind as fast as possible.
That could easily result in many more divorces as insider trading is a betrayal of confidence at every level. From the investing public to the employer to the client to a wife of inside trader, all are harmed greatly by insider trading. It is hardly a limited occurrence. Over the last five years, there have been more than 400 people accused of insider trading by the Securities and Exchange Commission and the Department of Justice. There could be many more now since it could result in a divorce.
A woman whose life is shattered suffers on so many different levels in an insider trading case. As insider trading is based purely on greed, but in many cases the profits are not used to maintain the lifestyle of the married couple. The insider trading results from base avarice or some perverted thrill the criminal receives in getting away with the transgression. In several cases, when a wife is more successful than her husband, it’s purely competitiveness between spouses and envy of wife’s success that pushes her husband to trade on insider information. For example, the wife is a highly successful career woman and has access to insider information because of her position within the company. Her husband, on the other hand, might be feeling competitive or bitter due to disparity of incomes, takes advantage of the emotional trust and open conversations that couples often share finds out certain non-public information from his wife and commits insider trading.
From this perfidy, a wife and family suffer greatly from financial losses as profits must be disgorged, penalties paid to the government, and massive amounts of legal fees incurred.The family is open to civil lawsuits limited only by the imagination of the plaintiff’s bar to apply the prevailing fraud doctrines for assets obtained. It is certainly possible for plaintiffs or government to sue or strip an innocent wife of any assets, like in Madoff case. There is always the threat of incarceration for the convicted insider trader, too. In total, everything can be lost by the family of an insider trader sent to prison.
But the greatest of these is the utter collapse of reputation and trust in every way possible for the married couple. Offenders will eventually be released from custody and the financial loss can be recovered, but the trust is gone forever in the marriage. For the betrayed wife, there is a loss of such a tremendous magnitude. It could end her career and the marriage.
One can argue, the popular notion of betrayal in marriage is in terms of sexual infidelity. And insider trading is not equivalent to a husband having an affair or another family on the side. However, another type is the betrayal of trust that destroys the marriage wife’s reputation, career or any kind of financial infidelity, like gambling or addiction. If a husband is accused, indicted or convicted of insider trading, there could be tremendous damage done to the career of his wife as employers or clients will not want to risk information being misused, no matter how it is obtained. If nothing else, the ability of a wife to discern character and make the right choice will certainly be brought into issue, whether justified or not. That is hardly a career enhancing consideration.
While there has been a huge increase in insider trading cases in recent years, there could be even more as spouses move to protect themselves. First, under any circumstances spouses should not share non-public information with one another, even if it seems very minor or non-material information, and couple enjoys fully open relationship. Second, spouses could now contact authorities if insider trading is suspected. The choice between shielding the criminal sleeping next to you or doing everything you can to protect your family, your career and the future for those you care about should not be a difficult one to make now that divorce laws are more sympathetic. A pre-emptive strike of this type from a spouse could spare the others from many of the ill effects of the insider trader’s greedy and selfish actions of criminality.
And when you face divorce, as a woman, you left with both emotional and legal damages. To get through this process in the most efficient way, you need to think of divorce in two components: first the emotional component and second the legal or financial component.
You need to plan ahead! Get all your paperwork together. The amount of information required for a divorce can seem overwhelming, so it makes sense to begin gathering all of it together as soon as possible. Then, you need to understand your financial situation. Once you gather all the necessary paperwork, you can then determine the net worth of the marital estate. Also, change your will, because divorce does not automatically revoke a will. If you want to prevent your soon-to-be-ex-spouse from receiving the monies and privileges granted them in your will, you need to update your will. And don’t forget your medial insurance coverage. If you are covered on your spouse's insurance, get complete medical and dental check-ups done for you and the children. It's important to have any necessary procedures done now while you are covered.
And as tempting as it may sound, do not hide any assets from your spouse. Hiding assets from a spouse during a divorce is not only a sneaky thing to do it is also illegal and it will only prolong and increase expenses of divorce process. Next, keep your debt down.Divorce is expensive. On top of attorney's fees, you will need money to set up a new household. Though it may be difficult to make ends meet, you should get used to having less now.
Finally, make sure that you can provide for yourself, because if devastated by insider trading or financial fraud, you might be liable to investors and creditors. The most important is to stay calm, breath and don’t rock the boat. Don’t send any spiteful e-mails or text message or phone calls.This will not only anger your spouse, but it may make your spouse less cooperative during the actual divorce.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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