Many people dabble in the stock market. For some business owners and employees, this might be their daily job.
There are rules and regulations that govern trading on the stock exchange. These are in place to try and ensure a level playing field. Generally, it is unlawful to trade on confidential information. Trading on non-public information is referred to as insider trading, and it can carry serious legal penalties.
Outlined below are some of the more common examples:
1. Insider trading at an executive level
Company executives have a duty to represent the best interests of shareholders. This involves running the company to make it profitable. However, this must be done within the confines of the law. Non-public information cannot be used in trading corporate stock. Not only does this go against the best interests of shareholders, but it is unlawful.
2. Insider trading at a personal level
Individuals may also face insider trading charges when acting on a more personal level. For example, if someone makes a personal investment based on a tip they received from family or friends. This in itself would not be unlawful if the information came from publicly available sources. However, if the information was non-public, insider trading charges could apply.
3. Insider trading on a political level
Data is pivotal in political campaigns, and political advisors are always trying to gain the upper hand over opponents. Occasionally, they may do this by acting unlawfully. Government employees often have access to sensitive information. If this non-public data is used to bargain with, this could be a form of insider trading.
Accusations of insider trading can be harmful to your well-being and reputation. That’s why it’s so important to seek as much legal information as possible.