Allegations of insider trading are serious criminal allegations that accused individuals should take seriously. That is because they can result in serious criminal penalties and consequences for accused individuals.
The general definition of insider trading is buying or selling a security in breach of a trust relationship on the basis of nonpublic information about the security. Accused individuals can face allegations of providing insider trading tips; can be the recipient of a tip; or can misappropriate insider tips they receive. Insider trading is a type of securities fraud that involves a breach of fiduciary duty and insider trading in particular involves misuse of material information about the security.
Examples of insider trading might include when corporate officers, directors or employees trade corporate securities after learning of confidential corporate developments; when friends, business associates and family members trade securities after receiving insider trading tips from officers, directors or employees of the corporation; employees of brokerage or other types of firms trade securities based on information they received in the course of providing services to the corporation; government employees who trade upon confidential information they learned during the course of their employment; political consultants who trade based on information they receive from government employees; and any others who misappropriate confidential information when trading securities.
Enforcement of securities laws is a priority which is why accused individuals should be familiar with how to protect themselves when they are facing insider trading accusations, allegations and charges. Being able to effectively defend against the charges they are facing can help them protect their freedom and future going forward.