Arkansas Man Pleads Guilty to Insider Trading
Summary
DOJ announced that Douglas Dalton, 48, of Bentonville, Arkansas, pleaded guilty to one count of securities fraud for insider trading. Dalton traded on material nonpublic information about Company-1's acquisition obtained from the company's former President/COO, generating approximately $96,515.44 in illegal profits on a $19,985.30 investment. Sentencing is scheduled for June 17, 2026, with a maximum penalty of 20 years in prison.
What changed
Douglas Dalton pleaded guilty to securities fraud for purchasing Company-1 call options based on material nonpublic information about an acquisition he received during a July 26, 2024 telephone call with Michael Smith, the company's former President and Chief Operating Officer. After the acquisition was publicly announced on August 7, 2024, Dalton sold his options for approximately $96,515.44 in profit, representing a nearly 500% return. Michael Smith previously pleaded guilty to the same offense in November 2025.
Both defendants face a maximum penalty of 20 years in prison. Dalton's sentencing hearing is scheduled for June 17, 2026, before a federal district court judge. Securities industry professionals and compliance officers should note this case demonstrates continued DOJ enforcement of insider trading laws and the risk of criminal prosecution for trading on misappropriated confidential information, regardless of the relationship between the tipper and tippee.
What to do next
- Review insider trading policies to ensure clear guidance on trading on information received from company insiders
- Reinforce training on material nonpublic information handling for employees with access to confidential corporate information
- Implement controls to detect and prevent trading patterns consistent with insider trading around significant corporate events
Penalties
Maximum penalty of 20 years in prison for securities fraud. A federal district court judge will determine the actual sentence after considering U.S. Sentencing Guidelines and statutory factors.
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Arkansas Man Pleads Guilty to Insider Trading
Tuesday, March 31, 2026
Share For Immediate Release Office of Public Affairs An Arkansas man pleaded guilty today to securities fraud in connection with insider trading based on material, nonpublic information that he misappropriated from a senior executive at a publicly traded company headquartered in Idaho.
According to court documents, Douglas Dalton, 48, of Bentonville, Arkansas, was close personal friends with Michael Smith, the then-President and Chief Operating Officer of Company-1. During a July 26, 2024, telephone call between Dalton and Smith, Dalton learned material nonpublic information regarding Company-1’s impending acquisition by another company at a price of approximately $31 per share. Given Smith’s senior role at Company-1 and their close personal relationship, Dalton knew that this information was confidential and material.
Based on the material nonpublic information he received from Smith, Dalton purchased Company-1 call options for approximately $19,985.30. After Company-1’s acquisition was publicly announced on August 7, 2024, Dalton sold the stock options he had purchased for a profit of approximately $96,515.44, representing a nearly 500% return on his illegal insider trading.
Dalton pleaded guilty to one count of securities fraud, and he is scheduled to be sentenced on June 17. In November 2025, Michael Smith pleaded guilty to the same offense. They each face a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division; U.S. Attorney Bart M. Davis for the District of Idaho; and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service Criminal Investigations Group (USPIS-CI) made the announcement.
USPIS-CI is investigating the case.
Trial Attorneys Kyle Crawford and John Liolos of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sean Mazorol for the District of Idaho are prosecuting the case.
Updated March 31, 2026 Components Criminal Division Criminal - Criminal Fraud Section USAO - Idaho Press Release Number: 26-305
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