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Types of Insider Trading - Insider Trading Does Happen

If you've ever wondered about the different types of insider trading and insider trades what exactly, I had some answers for you. General definition of insider trading is when someone with knowledge of non-public, such as executives or employees of the company, made the trade based on that knowledge. Although it is legal for people who work in certain companies to buy and sell shares of the company, the Securities and Exchange Commission, SEC, kept an eye on the transaction to guard against insider trading.


If a top level manager or the CEO wants to sell shares of their company, they should notify the SEC. This is because, for the most part, if a CEO sells shares of their own company most likely they have access to some information that does not look good for the company. The theory is that they shouldn't be able to profit, or avoid a loss, simply because they have information that is not available to the general public.

You usually hear about the form of the illegal trade in people, and usually when a person go to jail for it, but there are legal ways to trade Insider. If the employees of the company with less than ten percent ownership in the company want to buy or sell the securities of their companies, these are very valid. Someone who has a more than ten percent of the shares in the company can also trade the securities of their companies, as long as they notify the SEC, but cannot trade based on the information it is important that they know because of their work with the company.

Employees with lower levels need not worry about insider trading even if they trade securities from their employer, simply because they don't know the actual sensitive information during the period of their work.

Many people do not understand that they cannot defend themselves against accusations of insider trading simply by saying that they did not know they were doing anything illegal. It is expected that when you are in a position to know the types of non-public information, you also understand that using the information for financial gain is illegal activity.

The SEC has rules of full disclosure that States that if a company accidentally disclose non-public information, they should provide the same information to the general public. The SEC has a procedure in place that will allow the company to repair the damage done by the leaks of information a person in an intentional or unintentional.

Regardless of what you hear on your local evening news, there are several types of people in the trade, and not all of it is illegal. A crime to use your position as a company as a way for you to make money on securities transactions, or avoid losing money by selling the shares of your company because you know there is a problem in the future.

Before you engage in all types of stock trading, make sure you take the time to know all the ins and outs, after all, it is your money that you are using so you want to be as you possibly can.
Tag : Trading
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