When business-minded individuals in New York look into the stock market, they’re met with a whole world of possibilities. Unfortunately, you’re also going to run into a lot of laws dictating what can and can’t be done when it comes to buying or selling your stocks. Insider trading is known as an illegal move, but did you know that there’s actually a legitimate form of insider trading, too?
According to the United States Security and Exchange Commission (SEC), insider trading can actually refer to both legal and illegal conduct in the stock market. Generally speaking, it’s the latter that comes to mind. However, there is also legal insider trading that you can take part in. In this scenario, stock within your own company is bought and sold by employees, directors, or officers of the company itself. Though they must report these trades to the SEC, the act is not illegal.
It’s only once the trading focus shifts to other companies that it becomes illegal. Buying stocks from other companies with insider information is considered “cheating the market”. It can be a breach of fiduciary duty or the confidence of another person. It should also be noted that you can get in trouble for insider trading as either the person leaking information, or the person using leaked information to get a leg up in the stock market.
Being accused of insider trading is serious, and you can be penalized for it. If you’re facing similar accusations, you may benefit from enlisting a legal expert to get their opinion.