Under the Insider Trading and Securities Fraud Enforcement Act of 1988, damages recovered in enforcement actions can be:

• A. Nominal damages
• B. Treble damages
• C. Double damages
• D. No damages

Answer: (B)

The main idea here is that the act gives authorities the power to award treble damages in enforcement actions. Treble damages means three times the actual damages suffered by investors due to the violation. This threefold penalty acts as a strong deterrent against insider trading and securities fraud, while also compensating harmed investors more substantially. For example, if investors incurred $100,000 in losses because of a violation, the damages could be up to $300,000, in addition to any interest, penalties, and disgorgement the court may order. This is much more than nominal damages (a token amount) and far more than double damages, reflecting the enforcement aim to deter serious misconduct.