Houston Criminal Defense Attorney

Understanding insider trading and its definition under the law

Criminal allegations in Houston come in many forms. While there is often a perceived separation between violent offenses, drug crimes, drunk driving and other acts that are considered to be the worst of the worst, white collar crime can be damaging as well. One white collar crime that frequently happens because the perpetrators believe no one is getting hurt and they won't get caught is insider trading. An investigation into allegations of insider trading can cause problems for the accused even if he or she hasn't been involved in anything illegal.

Since it's such a prominent issue that arises in the news, many are aware of the term "insider trading." It's important to understand that there are forms of insider trading that are legal, while others are illegal. A legal way to trade with inside information is if those who are part of a company buy and sell stock based on what they know of the inner workings of their employer. This type of trading must be reported to the Securities and Exchange Commission.

If there is illegal insider trading, it is when a security is bought or sold and the conduct is done with information that is not known to the public. Tips on stocks from those in the know about the company's inner workings will be a violation of the insider trading laws. Examples of insider trading include securities being traded by people working at the company after confidential issues are exposed; friends, associates or relatives receiving information from those on the inside and using it to make trades; and outside companies such as banks receiving information and using it for their own benefit.

Since insider trading can compromise the fairness of the markets, it is an illegal act that can lead to prosecution and punishment if convicted. While many might not think that a white collar crime is as severe as the more "obvious" kinds of crimes that hardened criminals might commit, it can still lead to jail time and fines. When facing allegations of insider trading, it is imperative to have legal assistance from an attorney who is experienced in defense of white collar crime charges.

Source: sec.gov, "Insider Trading," accessed on Apr. 7, 2015