A series of posts published on this blog a couple of months ago discussed various types of white-collar crimes-such as insider trading, insurance fraud, embezzlement, tax evasion and money laundering-and the penalties associated with those. This blog post will discuss the various activities and actions that can be the grounds for filing federal criminal charges against an individual for engaging in insider trading.
Insider trading is a securities fraud that occurs within an organization that is involved in issuing and trading stock. It is a federal crime in which an “insider” buys or sells stock based on information that is confidential and has not been disclosed publicly yet. The Securities and Exchange Commission is the federal agency that is entrusted to enforce laws meant to prevent insider trading. The SEC has certain pointers that can be the basis of the criminal charges filed against an individual for insider trading.
First and foremost, a person should never trade securities based on inside information, no matter how attractive the prospects may look or no matter how attractive an insider’s tip may sound. If someone is in possession of any insider information, it is preferable not to share that with family or friends. Moreover, one should also not recommend a trade that is based on insider information, irrespective of whether the information is true or false, as acting in either situation is an offense in the eyes of the SEC. Finally, one should not share any insider information outside as the SEC is always on the lookout for inside traders. Failure to comply with any and all of these guidelines can be grounds for filing insider trading charges.
Despite the awareness of these rules, many people in Indiana and the rest of the country end up facing charges for insider trading. Sometimes, it is the result of a mistake on the part of the accused and sometimes, it is the result of being misguided. In fact, there may be times when an individual is framed. To make sure that one’s rights are protected, irrespective of how that person got entangled in criminal charges, it may be a wise decision to hire legal representation immediately after being accused of insider trading.