Insider Trading

For a successful retailer like the GWC USA company, something that they need to make sure never occurs is insider trading. When it comes to insider trader, many assume that it is an illegal activity yet it can involve both legal and illegal behavior depending on the actions involved. When it comes to the term legal insider trading, this refers to the buying or selling of stock by employees of the company whom are in a corporate position such as officers, directors or employees. These traders are seen as insider traders since they are part of the company and due to their positions in the company. The different between legal insider trading and illegal insider trading is when the buying or selling of security takes place in breach of the fiduciary duty or when a relationship of trust and confidence is overridden. Usually this can occur when an insider is the one who conducts the trade and they do this with private information that shouldn’t get leaked. Other forms of illegal insider trading are when information has been misappropriated or the tipping of information.

Someone does usually illegal insider trading and they mask themselves as an offshore company, a proxy or nominee. Insider trading is only illegal when employees, directors or corporate staff conducts trading activities by gaining access to confidential information. Corporate insider trading involved high-power executives who were sharing confidential material in a silent way. An illegal insider trader is all about a person trading when the trader is aware of the material being non-public information at the time of buying or selling this information. The only time trade is permitted is when the information is not considered to determine the decision of whether they should trade or not. It is important for large companies to make sure that no employee is doing illegal insider trades because this is a serious crime under the criminal law resulting in large penalties.

Leave a Reply