The laws surrounding insider trading are rather vague. This means that it is possible for people to accidentally commit insider trading, using information they were not supposed to use, without knowing that they are doing anything wrong.
The basics behind insider trading are simple. It happens when people have information that is not open to the public, and they use it to get an advantage in the market. For example, if you knew that a small company was about to get a huge government contract, you may know their stock was going to double in the near future. You could then buy stock in that company so that you’d get in at a low price and see your values double at the same time.
Now, if everyone knew the contract was coming, that’s fair. But, if you were privy to information that wasn’t given out to the public, you had an advantage they did not enjoy. That is illegal. As you can imagine, that could be very easy to do for someone connected to the company, like an employee, who simply sees the writing on the wall.
The government’s goal is to make sure that both buyers and sellers have the same information to base their decisions on. This can be very hard to determine, though, and the lines get blurry.
If you’ve been accused of insider trading, but you just thought you were acting wisely with the information you had, you need to know what defense options you can use. Even showing that you did not intentionally do anything wrong can significantly help your case in Ohio.
Source: Investopedia, “Can you accidentally engage in insider trading?,” Sean Ross, accessed May 26, 2016
