What should you know about insider trading?

Texas law treats security fraud crimes seriously. Insider trading is a type of security fraud. If you have inside information on the financial state of a company, then you are an “insider”. If you then make stock decisions based on information not known to the public, it is insider training. 

Insider trading works against those who do not have the same information you do. They cannot know whether the stock they buy or sell will be a net gain. Their every move is a risk. Knowing the outcome before you make a decision is an unfair advantage. If you act on insider information, you can face severe legal consequences. This does not just apply if you learn information from your own company. It can apply to tips from other individuals who may also have insider information. 

Likewise, you cannot recommend trades based on insider information. This holds true even if you do not give a reason for the recommendation. You cannot share this inside information with anyone outside of your company. This including friends and family members. You also cannot pretend to give out false insider information. Any of these actions can result in your arrest. 

You should treat all insider information as the confidential knowledge it is. Remember that it is illegal to trade securities on insider knowledge. Not only that, but the law classifies it as a federal crime. The punishments can include time in jail, exorbitant fines and trading restrictions. If you would like to read more about this or other white collar crimes, visit our linked web page.