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Insider trading is a legal issue that is receiving more and more attention everyday. There are many ethical and moral dilemmas that arise from illegal insider trading. ... Can the Securities and Exchange Commission put an end to illegal insider trading or will this continue to be major legal issue effecting the United States economy and securities market? ... In the past few decades the SEC has passed numerous enforcement acts and sanctions to attempt to put a damper on illegal insider trading. ... ” The SEC focuses much of its time on insider trading because at the moment, illegal insider trading poses the biggest threat to the integrity and fairness of the securities market.
The first thing that comes to mind when you hear the term “insider trading” is “illegal”, however, insider trading can be illegal as well as perfectly legal. For this reason, insider trading is a very sensitive subject when it comes to issuing lawsuits, and laying down a concrete definition of what type of trading is legal and what type is illegal. Insider trading refers generally to buying or selling a security while in possession of material, non-public information. The SEC is a bit vague on exactly what this means, however, basically if you have come available to any information about a company that is not available to the public and can fluctuate a stock price, and you are aware and willfully trade it, you are illegally insider trading. “The position or status of the insider, and of someone who has knowingly received a tip from the insider, may place that person in possession of material, non-public information that shareholders and others do not have access to, and could not legally acquire.”
Legal insider trading, on the other hand, is also widely used. ... However, insiders can not trade stock prior a public news release that will adjust the stock price if it can be proven that the insider made the trade based on the insider information prior to the news. ... Before they can file a lawsuit to attempt to charge parties for illegal insider trading, they must first choose whom to go after. The SEC considers an “insider” anyone who has confidential or pertinent information that has not been publicly available or announced, which gives the “insider” an advantage over the public. ... It is much more difficult to find proof of illegal insider trading when investigating an individual. “It is often difficult for the SEC to prove insider trading cases, as they are largely based on circumstantial evidence such as trading records, phone bills or credit card receipts. ... The news was later publicly revealed, the stock dropped along with the expected forecast, and Donna Yun was investigated for illegal insider trading.
Approximate Word count = 2249
Approximate Pages = 9
(250 words per page double spaced)
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