Insider trading is, basically, using one’s access to privileged information as a means of making money at other’s expense.
More specifically, an investor engages in insider trading when she uses business or financial information that is not available to the general public to make decisions on buying, selling or trading public securities, such as shares of stock in a publicly traded company.
An example of insider trading would be if an employee of a company learns that the company will shortly report a significant profit but hasn’t done so yet.
If the employee shares that information with his brother, who then goes and buys a bunch of the company’s stock, both may face accusations of insider trading.
Insider trading demands a firm response
Unlawful insider trading can lead to serious criminal and civil penalties for those who engage it.
However, many Pennsylvania investors might think that there’s little they can do about insider trading.
However, such behavior, especially if it is common, serves only to put investors who may be saving for retirement at a big disadvantage.
In some cases, it can leave people holding the bag on a bad investment while those who had access to private information can sell the same investment for a nice profit.
Those who wound up bearing a painful financial loss should be entitled to compensation for this sort of unethical behavior.
Nevertheless, insider trading can be very difficult to prove, as those who engage in this behavior for obvious reasons don’t publicize it.
Moreover, an Altoona investor will also have to show how the insider trading impacted her pocketbook.
Having an experienced legal professional can be very helpful in a person’s efforts to stand up to insider trading.