IMPORTANT TO NOTE: While we will remain open to meeting in person, in response to COVID-19, we are offering clients the ability to connect via telephone or video conference should they prefer. Please call the office to discuss your options further.

Assertive Representation In State & Federal Court

The difference between insider trading and being in the know

Several large, publicly traded companies call Cincinnati their home, while many other big corporations have regional offices or other important business hubs here.

Likewise, lots of individuals in the area, and throughout Ohio, invest in the stock market and other regulated securities. One need not be independently wealthy in order to do so.

Sometimes the worlds of private investing and the public operation of a large business intersect. There is nothing inherently suspicious about this.

It is okay for someone who works for a large company to buy and sell shares of the company’s stock, and it is also okay for a person to be in the know about their investments, that is, to follow closely publicly available reports about their business and the overall market.

Insider trading, however, is a completely different matter. Insider trading involves one’s use of confidential information, such as financial and business information they obtain from work, to make decisions about buying and selling stocks and other regulated investments. The person who uses confidential information must actually misappropriate it, that is, use it for self-dealing purposes, usually in violation of a duty of loyalty he or she owes the company.

Because insider trading could, if unchecked, call the fairness of the country’s whole financial system into question, it is treated as a serious white collar crime often punished in federal court.

In other words, authorities will work hard to show that an investor who has the privilege of knowing information not known to the public, such as the timing of a new product or the existence of unflattering financial information, will not have an advantage over everyone else.

Those who are accused of insider trading should take the charges seriously and, as part of that process, consider hiring an experienced legal defense counsel. Many times, what might be seen as insider trading could be innocent conduct that just looked bad or was even misunderstood.