Insider trading has become little more than a catchphrase in popular use over the last couple of decades. While many people generally recognize that insider trading is frowned up on or illegal, few people understand how they would actually avoid accusations of insider trading if they were confronted with an opportunity. While the world of investing is often convoluted and difficult to navigate, some basic rules can help people assess their actions and keep themselves safe while trading.
In very broad strokes, insider trading means making a securities or stock trade based on information that is not public. If you make such a trade, you may face serious penalties from the U. S. government. Agencies that monitor trading generally frown upon
- Any trades based on nonpublic information you possess
- Any trades based on nonpublic information that you obtain from someone else
- Sharing inside information that could influence trades with friends or even family
- Recommending trades based on inside knowledge, even if you do not share the knowledge
- Sharing intentionally false information to influence a trade
Many investors believe that some small violation of these rules is no big deal, because it is very unlikely that the agencies that monitor trades could even know that insider trading took place. Even if this is tempting, it is unwise. These monitoring agencies take their jobs very seriously, and are surprisingly adept at identifying and prosecuting insider trading.
However, not all charges of insider trading are fairly based. If you receive insider trading charges, be sure to do everything you can to build a defense and protect your rights. Professional legal counsel can help ensure that you fully understand your rights and the actions you can take to protect yourself as you fight to protect your future and your reputation.
Source: FindLaw, “Do’s and Don’ts: Insider Trading,” accessed Jan. 19, 2018