CM Un7Wk4 - Insider Trading

What is insider trading?

• Trading based on public information

• Selling stocks at a higher price

• Buying stocks through a broker

• Trading based on non-public, confidential information

What happens if you inform a family member about a non-public company deal?

• It's encouraged by stock markets

• It's considered a good investment tip

• It's considered insider trading

• It has no legal consequences

Who racked up 80 convictions for insider trading?

• Preet Bharara

• The SEC

• A famous stockbroker

• Martha Stewart

Why is insider trading hard to prove?

• Because it's legal

• Due to the lack of witnesses

• Direct evidence is rare

• All transactions are private

What was Martha Stewart convicted for?

• Fraud

• Insider trading

• Embezzlement

• Obstruction of justice and lying to investigators

What is insider trading?

• Selling stocks based on financial news

• Trading based on public information

• Trading in a public company's stock by someone with non-public, material information

• Any stock transaction reported to the SEC

When is insider trading considered illegal?

• When trading is done based on public information

• When the insider does not report the trade to the SEC

• When an insider buys stocks in their own company

• When trading is done during the stock market's open hours

What is considered non-public, material information?

• Historical stock prices

• General financial advice

• Information that could impact an investor's decision that has not been made public

• Information found in news articles

What are the consequences of illegal insider trading?

• Public apology

• Potential fines and jail time

• Mandatory financial literacy classes

• A warning from the SEC

Who is considered an insider by the SEC?

• Only the CEO and CFO

• Shareholders with less than 5% of shares

• Any employee of the company

• Directors, executives, or anyone with more than 10% of the company's securities