Common use of The Consequences Clause in Contracts

The Consequences. The consequences of xxxxxxx xxxxxxx violations can be substantial: For Individuals who trade on inside information (or tip information to others): • A jail term of up to 20 years (30 years in certain circumstances); • A civil penalty of up to three times the profit gained or loss avoided; and • A criminal fine (no matter how small the profit) of up to $5 million. For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading: • A civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of the Individual’s violation; and • A criminal penalty of up to $25 million. In addition, plaintiffs may claim that Individuals or the Company are also liable to contemporaneous traders. Further, if the Company has a reasonable basis to conclude that an employee has violated the Company’s xxxxxxx xxxxxxx and communications policy, whether or not knowingly, the Company may impose sanctions, including dismissal for cause. Needless to say, any of the above consequences, even an SEC investigation that does not result in prosecution, can tarnish one’s reputation (as well as the Company’s) and irreparably damage a career. Finally, the size of a transaction has no impact on potential xxxxxxx xxxxxxx liability. In the past, even relatively small trades (e.g., trades as small as $400) have resulted in SEC investigations and lawsuits.