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Insider trading and the Securities Exchange Commission

While a number of our posts have been on FINRA’s enforcement of securities regulations, the United States Securities and Exchange Commission is also charged with maintaining fair, orderly and efficient market trading, all while protecting investors.

This mission is increasingly important given how many new investors are entering the market, and because of how market volatility can play on the fears of those who are afraid of losing everything they have through risky, yet unqualified investments. Perhaps the most common violation that the SEC enforces is insider trading. 

This is where a public company’s stock or other forms of securities are traded by individuals who have access to non-public information about the company or security. This gives these individuals a substantially unfair advantage in trading. As such, insider trading is illegal, and could have criminal consequences.

In fact, the SEC works in conjunction with the U.S. Attorney’s Office, the Federal Bureau of Investigation (FBI) and state attorney general’s offices when investigating cases when investors are defrauded. In fact, insider trading cases could take years to investigate and prosecute, so communication between agencies is important.

Insider trading also can have civil consequences, even if a person may not be facing jail time if held liable. As we have noted in prior posts, there are a host of penalties an unscrupulous broker or brokerage firm can be subject to if found to have engaged in insider trading.

If you have been harmed by an instance of insider trading, a securities law attorney can help in realizing civil damages. 

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