I think the purpose of the fine is to disincentivize the behavior, not to sting necessarily. And to properly disincentivize the behavior it just has to make the behavior have negative expected value.
A fine of 2X profit is only negative expected value if the chance of getting caught is at least 50%. I'm very confident that the chance of getting caught is far less than 50%.
So you're saying that for a VC, where a common approach is to invest $1 million each in 100 different startups and if just two of them turn into $50 million then you break even, a fine like this is already factored into the game?
I wonder what the ROI difference is between the two gambles. 100 $1 million dollar bets returns $120 million? 20 $100000 insider trades returns $5 million - $1 million fines?
A 20% return is pretty good. But if it takes 2-3 years per startup, it's not as good. And it ties up $100 million.
A $2 million investment that pays out $4 million within a year is much more spectacular.
Edit: I am not accusing anybody of having made 20 insider trades. I am just musing about potential business models.
