If you are one of the many people in Pennsylvania who participate in trading on the stock market, you should be aware that the U.S. Securities and Exchange Commission regulates activities carefully. A suspicion that you are guilty of insider trading may result in an investigation and federal criminal charges. Our legal team at The Law Offices of Campana, Hoffa, Morrone & Lovecchio, P.C., often assists clients who have attracted the attention of the SEC with their trading activities.
According to myStockOptions.com, insider trading is generally defined as trading based on a company’s information that is not known to the public. The act of buying or selling securities in such a situation breaches a relationship of trust or a fiduciary duty due to the insider knowledge of the person engaged in the act.
For example, if you are a part of a corporation and you learn of a significant development that will affect the value of the company’s securities, it would be illegal for you to act on this before the information becomes public. It is also illegal for you to tip off a friend, family member, colleague or business associate as to the nature of the private information so that they can act on it. If a client, vendor or other person provides you with private information regarding securities, it would be wise for you not to act on it.
However, you do not have to be a company insider to be convicted of an insider trading violation. In fact, the SEC has become very aggressive about investigating for signs of insider trading of hedge funds, and even if you did not receive private information before your trade, you may find yourself under scrutiny. More information about white collar offenses can be found on our webpage.