Insider trading is a serious crime and those facing insider trading charges can face serious penalties and consequences as a result. Because of the serious nature of accusations that someone has committed insider trading, it is helpful to know what it is, how to avoid it and what to do if accused of insider trading. Insider trading, a kind of securities fraud, is a type ow white collar crime.
When does insider trading happen?
Insider trading happens when a person on the inside of a company, such as an employee of the company or family member of an employee, uses insider information they obtained from working inside the company to make a decision to buy or sell stock. Insider information is considered confidential information that is not yet available to the public. Acting on the confidential information not yet public can be considered insider trading.
Ways to avoid insider trading:
- Keep insider information confidential;
- Do not act on insider information obtained as an insider or provided as a tip by someone else;
- Do not provide insider information to anyone even family members;
- Do not provide false or misleading financial information about the company; and
- Be familiar with the company’s trading policy and applicable trading laws
Insider trading is a federal crime that violates securities laws. The penalties and consequences associated with insider trading or not insignificant and should not be taken lightly. As a result, anyone accused of insider trading should be familiar with their criminal defense options so they can promptly protect themselves from the charges they are facing.