What Constitutes Insider Trading?


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What Constitutes Insider Trading?

We have all heard the term insider trading – and a few big-name cases probably spring to mind – but understanding what insider trading is all about is a different matter entirely. At its core, insider trading is a form of white-collar crime that can lead to severe fines and even time behind bars. The term insider trading refers to when someone inside a company shares private (non-public) information about the company (typically information about the company’s changing financial value) for personal financial gain, which usually involves hastening to purchase or trade the involved securities. Even tipping someone off about an impending change can lead to charges of insider trading. While the mechanics of insider trading can be complicated, the basics are not.

You Do Not Have to Be an Insider to Be Charged

Most of the insider trading cases you have heard about are high profile cases that involve top executives, but there is no such requirement. In fact, nearly anyone can become entangled in such a case. For example, if the president of a large, profitable corporation learns that a major purchase of another company is in the works and happens to chat with another parent about this fact while picking up his or her kid at daycare – it can start the ball rolling. If the other parent then acts on the information by running out and purchasing stock in the company that is about to be purchased, it can amount to insider trading (because they are trading on information that is not available to the general public).

Resulting Penalties Are Harsh

Insider trading is a white-collar crime, which means it is a financial crime predicated on fraud rather than on the violence of violent crimes. Many people are under the mistaken belief that such crimes are punished much less harshly or do not ever result in prison sentences, but this is far from the reality of the matter. Federal laws include all the following sentence maximums for insider trading convictions:

  • Spending up to 20 years in prison

  • Paying a fine of up to $5 million

  • Returning the profits or illegal gains obtained

When you think about insider trading, big, splashy cases likely come to mind. However, the reality is that insider trading is often relatively mundane – but is, nevertheless, illegal.

Look to an Experienced Killeen Criminal Defense Attorney for the Help You Need

If you face insider trading charges – or charges related to any criminal offense – you need Attorney Brett Pritchard at The Law Office of Brett H. Pritchard in Killeen, Texas, in your corner. Mr. Pritchard has impressive experience successfully defending the rights of clients like you, and he is invested in doing the same for you. The outcome of your case hinges on your defense, and our dedicated legal team is committed to skillfully affecting your best possible defense and subsequent case resolution. To learn more about how we can help, please do not hesitate to contact us online or call us at 254-501-4040 today.

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