Insider trading is considered a serious white-collar crime by most judges, and also by the general public. Unfortunately, the recognition of one's own actions as insider trading rarely occurs to people. In the case of a stock price that is going to drop, people see it merely as self-preservation; in the case of a stock price that is going up, many people see it as getting in on the ground floor or simple luck. Many of these people end up needing experienced criminal attorneys because they followed their instincts. Here we are reviewing insider trading definitions and laws.
What is insider trading?
Insider trading means that a person is either buying or selling stock options based on information that is not generally known to the public. The law sees that losses and gains in the stock market should be regulated more by good investment practices on the part of the investor than by any inside or privileged knowledge. This is where these cases come in to the hands of criminal lawyers.
Insider trading relates to both buying and selling
Insider trading can be enacted equally innocently (that is, without knowledge of the action's status as a federal crime), from either side of the fence. Whether you buy or sell stock with inside information, though, it is equally illegal. For example, if you work at a company that is about to release a new product with high sales potential (but is still secret), and purchase a large number of shares just prior to the release, it is considered insider trading. If you work at a company that has just sustained a massive loss and sell your shares just before the news becomes public, it is also considered insider trading by criminal attorneys and judges. However, intent can go a long way towards mitigating the crime in the court's eyes.
What law does it come under?
There is no specific law that forbids insider trading, but it is generally recognized as a violation of securities law. The specific phraseology which is often pointed to is that referring to the definition and prohibition of manipulative and deceptive acts, set down in 1961.
The reason that insider trading is considered wrong is that an insider, such as a company employee or someone else with a special relationship (an accountant or other outsourcer, for example), owes a financial duty of care to the company's stockholders not to use their information of personal gain.
However, this duty extends to not telling others about the information to allow them to use it for monetary gain -- so a person who has his wife sell her shares in a company on the basis of insider information may still be convicted of the crime, depending on the individual circumstances and their criminal attorney's competence.
No comments:
Post a Comment