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Insider Trading Questions

What is insider trading?

Insider trading is when an individual with potential access to non-public information about a company trades a corporation’s stocks, bonds, or stock options. In a lot of countries, trading by a company’s officers, key employees, directors, and large shareholders may be legal as long as it is done in a way that does not take advantage of non-public information. The term of insider trading is frequently used to refer to a type of practice where the insider or a related party trades based on material non-public information while performing the insider’s duties within the corporation, or in breach of a fiduciary or other form of relationship of trust and confidence or where non-public information was taken from the company. To find answers to your complex questions pertaining insider training contact the Experts.

If a factory worker tells a friend about the stocks in the company and then the friend tells more friends would this be insider trading and can everyone get in trouble for this?

When an employee has access to non-public information and then trades the company’s stocks, then this is insider trading. If the employee used information that was not available for the public then they would be guilty of insider trading. The friends of the employee would be guilty of insider trading or they would just simply be guilty of accessory to insider trading.

What does a person need to do if the Securities Exchange Commission (SEC) freezes a bank account for suspected insider trading?

The person would need to contact the SEC investigators and answer some questions as to where the person came across the information so that they can determine if indeed it was insider trading. The investigation will have to be completed before they will release the account. Even when the person contacts the SEC, there is a chance that they will not release the account when the investigation is over. If that happens then the person will have to contact a lawyer that specializes in the SEC cases and have them negotiate the release of the account.

What is the 10b-5 rule of the SEC?

Rule 10b-5 states; “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, to employ any device, scheme, or artifice to defraud, to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”

How would a person find out how many stocks they own in a company if the stock broker that sold them the stock was shut down by the SEC due to insider trading?

The person would need to contact the SEC and they should be able to give the person the information or the person could contact any stock broker and they would, in most cases, be able to find out how many stocks and in what company that the person owns.

Insider trading, whether it be by accident or intentional, is against the law and a person can get in serious trouble. If the person thinks that he/she has been involved in insider trading, then he/she would need to contact an Expert to get answers and insight on what he/she should do.
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