Insider trading is not always a crime. In fact, CEOs engage in insider trading in a legal manner all the time. However, when a CEO chooses to buy and sell stocks within their company while using information that is not available to the general public, this can be considered a crime.
How Insider Trading Works
A CEO has access to confidential information. However, to take advantage of that information is a breach of fiduciary duty. As a result, corporate officers, directors, and company members are required to report any trading to the SEC. Insider trading is bad for economic growth because it increases the cost of capital for securities traders. Therefore, the US government attempts to uncover, prosecute, and punish those who engage in insider trading.
If you have access to information that indicates that you should buy or sell a stock in your company, you might be accused of insider trading. However, you might argue that the public already knew about this information as a result of the information being leaked to the press. Under these circumstances, you may be able to mount a successful criminal defense against charges of insider trading.
Law Enforcement Might Investigate Tips Given to Friends
One example of insider trading that can be considered illegal is giving tips to friends. When a friend is given privileged information, they must not make a decision regarding a trade while making use of this information. However, your friend will need to know that the information was privileged to be convicted. Under these circumstances, anyone should consider contacting white collar legal services.
The Information Might Not Have Ever Been Relevant
If you hire a white collar criminal attorney, they may be able to successfully argue that the information that the public did not have access to is not actually necessary to make the decision to purchase the stock.
Also, if you contact a criminal attorney early enough, you may be able to avoid criminal prosecution by resolving the issue in civil court. However, it may be harder to win a civil case because you must only be found negligent based on a preponderance of the evidence.
Your State of Mind Is Important
The prosecutor needs to prove that you knew that you were using privileged information to trade stocks and must have strong and compelling evidence. Your white collar attorney will help you prove that the evidence presented is not compelling so that your charges can be reduced or dismissed.