Are you familiar with the term securities fraud? Chances are you’ve heard of it concerning some high-profile case in the news, but do you know what it is? In short, securities fraud is when someone deliberately misleads investors or uses false information to generate profit. It can be a serious crime, and if convicted of it, you could face fines and imprisonment.
But, can you accidentally commit securities fraud? The answer, unfortunately, is yes. There are many ways in which someone could inadvertently break the law regarding securities. One of those ways is through insider trading.
What is insider trading?
You might associate insider trading with big corporations and Wall Street stock traders. Insider trading is having access to knowledge that isn’t available to the public and using that knowledge to make decisions regarding the sale or purchase of stock.
Section 10 (b) of the 1934 Securities and Exchange Act states that insider trading is a crime and enforces that rule through the Securities Exchange Commission (SEC). You might think that insider trading has nothing to do with you but consider the following scenario:
You are at a neighborhood barbeque and talking with some friends. While flipping burgers, one friend tells you about a new product his company is developing that will revolutionize daily life as we know it. He suggests you buy some stock before this product becomes public knowledge. You follow his advice, and when the product hits the market, the company stock goes through the roof, and you make a considerable profit. In the eyes of the law, you have just committed insider trading, and you may be in for some legal trouble.
If you are concerned that you may have committed securities fraud, it is crucial to take action immediately. Reach out to someone who can help guide you through the process and protect your rights.