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Former Assistant U.S. Attorney

What is insider trading?

On Behalf of | Jun 17, 2020 | Federal Crimes

Mississippi residents like you may have some involvement in stocks. If you choose to have a share of stocks, there are things you must understand. For example, you must know the legal way of going about your stock management. Some stock-related crimes are more well-known than others. But they can all have devastating penalties. 

Insider trading is one of the most commonly discussed crimes related to stocks. Some people may not even know they are committing this crime, though. 

Insider trading as an illegal activity 

The Merriam-Webster dictionary defines insider trading as an illegal activity. It involves the sale or purchase of a company’s stocks with secret knowledge. This knowledge comes from someone within the company. Sometimes, two people from within companies may trade inside information with each other. In other cases, an employee of a company may use the knowledge they have to get a leg up on everyone else. 

Why is it illegal? 

So why is insider trading illegal? The stock market should remain an even playing field for everyone. What if someone uses extra knowledge to their advantage? It is unfair for those who do not have the same information. 

You can get in serious trouble if convicted of insider trading. As an individual, you may face fines of up to $5,000,000. Non-natural persons face fines of up to $25,000,000. This includes entities with securities that are up for public trade. Also, you may face time in jail. The maximum prison sentence is 20 years. 

Insider trading is a charge to treat in a serious way. If you face insider trading charges, what should you do next? Consider seeking the aid of an experienced attorney.