If you trade a stock on insider knowledge and you lose money, do you get your money back when the SEC prosecutes you?

In June of last year, PENN National Gaming Inc. (PENN) agreed to be acquired by a group of investors led by Fortress Investment Group (FIG) for $67 in cash for each share of the stock. At the time of the buyout announcement this was a 31% premium over the previous days stock close at $51.14.

Right after the merger was announced the stock shortly dropped for 7 straight trading days. Normally after a buyout announcement stocks trade pretty close to their buyout price, say within 5% of the actual buyout offer. PENN was only at that range the first day the merger was announced. Now the date of the merger also has a play on how close the stock will actually trade to the buyout price. In the case of PENN the merger wasn’t set to complete till 12 – 16 months after the announcement, a bit long for some people’s tastes. The terms of the buyout agreement had a clause that said if the merger wasn’t complete after 12 months the purchase price would increase by $0.0149 per day after June 15th 2008.