People buy and sell stocks on a regular basis. There’s usually no issue with doing this unless the person who is doing the trading is using information that they shouldn’t have access to when making those decisions.
Insider trading occurs when a person buys or sells a company’s stock based on important information that’s not public. In short, they use secrets that aren’t available to all investors to make a profit in the stock market.
Who can be accused of insider trading?
Anyone can be accused of insider trading. It’s commonly executives, consultants or employees who are known to have access to confidential information about the company. It’s also possible that someone who receives a stock tip about the company from someone with inside information will be held criminally liable if they act on the information.
Why is insider trading illegal?
The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) typically handle cases involving insider trading because insider trading can undermine public trust in the financial markets. This can give certain people an unfair advantage, which can lead to significant harm for everyday investors.
There are several federal laws that contain information about what constitutes illegal activities involving trading. It’s often possible that other charges, such as wire fraud or securities fraud, will come into the picture with these cases. Because these matters are so serious, they can lead to incarceration in federal prison upon conviction.
Being accused of insider trading isn’t something that anyone should take lightly. This is a serious matter that requires a carefully considered defense strategy. It might be best for individuals in this position to work with someone who’s familiar with these matters so they can have guidance about their options.
