The Inside Guide to Insider Trading

It’s not just those who work in or are heavily invested in the stock market these days who know about insider trading. Especially with the financial trouble of the last few years, the media has jumped on stories of insider trading. Most people who tune into the news have a general sense of insider trading, and may even associate it with names like Martha Stewart and Mark Cuban.

However, insider trading isn’t as cut and dry as it sometimes appears. Consider the following facts:

• Put simply, insider trading occurs when someone buys or sells a company’s stock based on information that is not available to the general public. However, it is legal for corporate officers to trade stocks in the companies they work for, and these individuals almost always have some information that the public is not privy to. This can create a gray area where it can be difficult to know if insider trading occurred.
• It’s not just corporate officers who are subject to insider trading charges. Anyone who learns non-public information from an insider and trades on it may be subject to charges.
• One type of insider trading not discussed as often by the media is misappropriation trading. In essence, if a person learns insider information through their job and then makes trades based on that information, even if the stock isn’t in their own company, they are considered to have stolen information (or misappropriated it) from their employer and conducted illegal insider trading.

For More Information

There are many specific regulations regarding how company officers, directors, and owners can and cannot handle their stocks. It is best to practice caution in this era when prosecutors are eager to go after corporations and their officers. Call the Austin business attorneys of Slater, Kennon & Pugh LLP, at 512-472-2431 today to find out what the implications of insider trading regulations are for you and your company.