The U.S. Securities and Exchange Commission (SEC) regulates companies who offer securities for sale to the public and those who sell and trade securities and offer advice to investors. One of the SEC’s goals is to maintain consumer confidence in the fairness and integrity of the stock market. As a result, the SEC focuses on illegal insider trading in its enforcement priorities.
If a person is charged with this crime, there can be serious consequences. Illegal insider trading refers to buying or selling stocks on the basis of information that has not been made public.
Nonpublic information can include capital investment plans, negotiations concerning acquisitions, new contracts, financial projections and significant changes in control or change in management, among other information. Insider trading can also include providing tips about this information.
Examples
There are several examples of when illegal insider trading can occur. These include when corporate officers, directors and employees trade the corporation’s stocks after learning about confidential information.
It can also include employees of banking and brokerage firms who trade stocks based on information they received as a result of providing services to a corporation, government employees who learn of confidential information through their employment or other people who misappropriate or take advantage of confidential information from family, friends and others.
Penalties
Insider trading convictions can result in prison time and/or monetary penalties for the accused. In addition, the person can suffer reputational harm, it can affect their future employment prospects and present other challenges.
An experienced attorney at Kammen & Moudy can provide representation to the accused and review the circumstances of the situation.
