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If someone provides or possesses inside information about a listed company, information not released publicly. Then with this information a trade is executed, is trading illegally. This is Insider Trading.

The term Insider Trading has very negative implication and so it should. Whether or not an insider who trades in a public company is acting legally or illegally, depends on when and how the trade is made. But if in doubt, do not trade. Let’s go through the six examples of Insider Trading, cases that have been brought by the SEC, listed on the SEC website.

Case One
Company Executives, Directors and Employees who traded the Corporate Stock after learning about non-publicly disclosed information.

Case Two
Friends, family, or business associates tipped off to such information from company employees of any level.

Case Three
Employees of brokerage, banking, law, or printing firms who traded based on information they obtained through providing services to the company.

Case Four
Government employees who traded because of non-public information they learned due to the nature of their employment

Case Five
Political intelligence consultants who trade or offer tips due to non-public data ascertained from government employees.

Case Six
People who misappropriated and used non-public information from numerous sources, including family, friends, and employers

The Six SEC Cases reveal that Insider Trading is not an exclusive domain of individuals who fall under the “Insider” definition. Central to the concept of Insider Trading is information and how it is used. Therefore, a person outside of a company can be equally guilty of Insider Trading as a corporate executive. The legal consequences of Illegal Insider Trading can be very severe, with a maximum fine of $5 million and a maximum prison sentence of 20 years, per the SEC regulations.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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