Whether it happens in South Carolina or any other state, illegal insider trading is a serious white-collar crime that could warrant federal charges. According to the Securities and Exchange Commission, illegal insider trading involves buying or selling securities in breach of fiduciary duty or some other trusted relationship based on material, non-public information about the investment.
Understanding insider trading
Detecting and prosecuting insider trading is an enforcement priority for the SEC because it undermines investors’ confidence in the integrity and fairness of the markets. Illegal trading violations may apply to providing the information, the securities that were traded by the investor and the securities traded by the person providing the tips. The most common types of cases prosecuted by the SEC involve corporate directors, officers or employees attempting to trade securities after learning about confidential corporate developments.
Common cases of insider trading
The SEC does file charges against family members, friends, and business associates who attempt to trade securities on the information provided by the corporate insider. The liability for taking advantage of access to confidential information and the public trust also extends to government employees, banking employees, law firm employees, and political consultants, among others. Finding a qualified criminal defense lawyer experienced in white collar crime may help anyone facing insider trading charges.
Insider trading becomes illegal when the information being shared is still non-public. Material information is anything that significantly impacts an investor’s decision about trading securities. Insider trading is legal as long as it’s done in accordance with the laws set forth by the SEC. The maximum penalty for individuals charged with insider trading is 20 years in prison and $5 million in fines.