Insider trading sounds like a planned, carefully-orchestrated crime. The implication is that someone intentionally used private information for personal financial gain. Those with work in finance or in adjacent industries could be at particular risk of insider trading accusations.
Insider trading can lead to major losses for investors and businesses, which is why federal agencies are keen to push back against bad actors. Could you potentially commit insider trading without even realizing what you’ve done?
Innocent conversations could lead to criminal accusations
Typically, intent plays a major role in criminal charges. However, that isn’t necessarily true about insider trading charges. You don’t have to want to cause harm to others economically for the things you say to others or your financial decisions to constitute a criminal act.
Many seemingly innocent behaviors could constitute insider trading. Knowing that a business will soon declare bankruptcy because you work for an accounting firm, for example, might prompt you to eliminate any investments you had made in that company or advise your loved ones to do the same.
Anyone with access to confidential or non-public information about securities could find themselves facing criminal charges if they use that information for their own financial gain or if people that they know use that information.
A slip of the tongue could look like a crime
A professional could share with some of their drinking buddies at a local happy hour that they know about a big upcoming merger. When their buddies go out and make major trades because of what they learned, the person who overshared could face consequences.
While they didn’t benefit from what happened, that individual still laid the groundwork for other people to engage in insider trading because they had access to information that the general public does not.
Prioritizing confidentiality helps protect you from such claims
If you work in the finance industry or are a business executive, you have access to information that the public does not that could impact the value of a business or the success of an upcoming transaction.
It’s important that you treat such information as confidential and not share specifics with anyone, including people that you think you can trust. You could be the one at fault if your neighbor or your sibling violates your trust in them by conducting a major transaction because of the information you share with them.
Limiting what you share with other people can reduce the likelihood of white-collar criminal charges against you due to insider trading allegations.