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Selective Disclosure and Insider Trading

WhiteCollar

A person can be charged with insider trading if he or she is accused of trading shares of stock or other securities based on material information about a company that is not known to the general public. In fact, a person can be convicted of this offense even if there is no proof that he or she actually used the nonpublic information when making a purchase or sale. Instead, prosecutors only need to prove that a defendant was in possession of the information at the time the sale or purchase was made.

Corporate executives, directors, officers, and major shareholders are targeted most often when it comes to making accusations of insider trading, but it is also not uncommon for any mid-level employee who has access to material, nonpublic information to be charged with this offense. To ensure that you are not convicted of insider trading based on false accusations, please contact our white collar crime legal team today for advice.

What Qualifies as Insider Trading? 

As mentioned earlier, possessing nonpublic material information about a company and then making a sale or purchase of stocks or shares in the company qualifies as insider trading. In fact, a person doesn’t need to disclose the information to anyone in order to be charged with this offense, although this type of conduct does fall under the definition of insider trading. If, for example, a company’s executive told a neighbor that his or her company is considering merging with another corporation and that neighbor then buys or sell shares based on that information, the neighbor, as well as the executive, could be charged with insider trading.

What Prosecutors Must Prove to Obtain a Conviction  

Before a person can be convicted of insider trading, prosecutors must be able to demonstrate that the defendant:

  • Had a fiduciary duty to the company or was otherwise in a relationship of trust and confidence; and
  • Intended to personally gain from purchasing or selling shares based on that information.

However, it’s important to note that not all trades made by insiders, or executives, shareholders, or employees are unlawful. For example, someone who works with a company that has a stock option plan can trade in the company stock, but only if the trade is made in accordance with company policy and SEC regulations.

Some of the most well-known scenarios in which a party is charged with insider trading involve:

  • Corporate officers, directors, and employees who trade securities after learning about confidential and significant corporate developments;
  • Friends, associates, and family members of directors, employees, and officers who trade securities after learning confidential information about a company;
  • Employees of brokerage, law, banking, printing firms, or the government who make trades based on information they obtain when providing services to a specific company or agency;
  • Political consultants who sell or buy shares based on information obtained from a government employee; and
  • Any individual who makes a trade based on confidential information misappropriated from a third party.

Contact Our Legal Team Today for a Free Consultation  

For help fighting accusations of insider trading that have been levied against you, please call Miami white collar crime lawyer Jeffrey S. Weiner, P.A. at 305-670-9919.

Resource:

investor.gov/additional-resources/general-resources/glossary/insider-trading

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Miami Criminal Attorneys

9130 South Dadeland Blvd
Miami, Florida 33156

Telephone: 305-670-9919
Fax: 305-670-9299
Email:lawfirm@jeffweiner.com

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