Damico & Stockstill, Attorneys at Law

Understanding insider trading

If your business is involved in trading stocks, you must follow all securities laws. A basic understanding of the complicated laws might prevent mistakes. The Securities and Exchange Commission enforces these laws. It takes strict action against any business or individual who does not comply. It is essential to avoid activities that may be classified as insider trading. Inside information that is not available to the general public may not be used to make trades and generate profits.

An insider is someone who has confidential information about the finances of a particular company. This may be a high-level employee, someone in the financial department, or even a family member of an employee. Insider trading takes place when an insider uses the confidential information to buy or sell stocks. Using information that is not available to the public puts the insider at a huge advantage. Securities and Exchange Commission regulations require that if a company has disclosed vital information to an individual, they must also disclose it to the general public.

If you are part of a business involved in trading stocks, you must remain vigilant. Do not provide confidential information to anyone, not even close family members. Trading stocks on someone else's tips also qualifies as insider trading. Remember that even recommending a trade without giving a reason will be considered an offense. Make sure you know all the company policies regarding the use of inside information. Stay up to date with any new SEC regulations and laws, especially those that apply to your position.

Securities laws are complicated and may be difficult to understand. You might face severe consequences if found guilty. If you have been accused of insider trading, it is advisable to contact an experienced attorney. An attorney will go through your case and come up with a reasonable defense strategy for you.

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Damico & Stockstill, Attorneys at Law

8048 One Calais Avenue | Suite A | Baton Rouge, LA 70809-3483 | Phone: 225-250-1812 | Fax: 225-769-0195 | Baton Rouge Law Office Map