Insider trading
receives as much attention from the press and the investing public as any subject the SEC deals with.
Not all insider trading is illegal: Insiders buy and sell shares in their companies every day and announce the trades to the public. In fact, some investors use information on what insiders are doing as one factor in making their own buy and sell decisions.
But trading on material information unavailable to the public, in breach of fiduciary duty or other obligation, is against the law. In fact, not only corporate officers but their attorneys and advisers as well as other people who may have access to such significant but undisclosed information can be guilty of insider trading if they buy or sell based on that knowledge or encourage others to do so.
In essence, like the
SEC’s
fair disclosure requirements, the ban on illegal insider trading seeks
to level the playing field for investors, a policy that has economic
effects beyond simply what securities cost at any given time.
