martha stewart imclone stock trading case
martha stewart imclone stock trading case
What is inside information
First, it is important to note that there are two meanings different use of privileged information. The first is illegal and refers to any person who performs an operation on the market stock and benefits (or avoid losses) on the basis of information about the company was not public information at this time. The second part refers to a company official trading company, which is not illegal unless they use insider information to make a profit.
Martha Stewart
Perhaps the most famous example of crime insider in recent history is Martha Stewart. What exactly am I doing wrong? Well, a company that invests, ImClone, had a drug against the cancer that had been rejected by the FDA, but this information was not available to the general public at the time. The SEC believes that his friend Sam Waksal said the rejection and recommends to sell their ImClone stock, made immediately. In this way, they avoided a big loss when stock prices finally abandoned. This is a typical case of abuse of insider trading, and faces imprisonment for him.
Why Is it illegal
The Securities and Exchange Commission establishes and enforces rules for the stock market as the place for the trade fair as possible. They think that when the transactions of someone who uses information that is not well known, it is not fair to the general public. A society listed company is required to share their financial reports and important news for the world to shareholders and potential shareholders can make informed decisions. After all, the company is owned by shareholders and deserve to know what is happening with your company.
How to avoid problems
Probably the easiest way for you to get into trouble is if you work for a publicly traded company and try negotiating shares of your company for a profit based on the information we hear in the office not been made public yet. Share or receive this information from one friend to another company so badly. These situations are very tempting, and understandably so. Is difficult to take advantage of Exchange after the news has already reached the market. Yet that is exactly what is illegal, so try to avoid it. There are many gray areas in what is regarded as inside information, but if you are in doubt, do not trade securities of your company. There are thousands of other companies who can invest in.
