What are the legal restrictions on insider trading?
Insider trading is the illegal buying or selling of securities (stocks, bonds, or other financial instruments) based on information not available to the public. In California, the legal restrictions on insider trading are outlined in state and federal securities laws. Under California law, the state fair practice regulations prohibit any person, including corporate insiders, from buying or selling securities based on material, non-public information. If a person buys or sells, or attempts to buy or sell, a security while in possession of material, non-public information, the person can be subject to civil and criminal penalties. At the federal level, the Securities Exchange Act of 1934 regulates the behavior of corporate insiders. This Act prohibits insider trading that involves material, non-public information, meaning information that could affect the value of a security and which is not available to the public. This Act also requires corporate insiders to file reports with the Securities and Exchange Commission (SEC) if they buy or sell securities of their own company. In conclusion, insider trading is illegal in California and is heavily regulated at the federal level. Individuals, including corporate insiders, may not use material, non-public information to buy or sell securities. Those who do so may be subject to civil and criminal penalties. Additionally, corporate insiders must file reports with the SEC if they buy or sell securities of their own company.
Related FAQs
What is the process for registering a copyright?What is the purpose of a trademark?
What is the purpose of corporate tax?
What are the steps required to register a business?
What is a non-disclosure agreement?
What are the fiduciary duties of a corporate officer?
What are the legal restrictions on advertising?
What are the rights and responsibilities of employers?
What is the purpose of anti-trust law?
What are the legal requirements for setting up a business in another state?
Related Blog Posts
Understanding Business Law: What Every Business Needs to Know - July 31, 20237 Key Aspects of Business Law Every Entrepreneur Should Be Aware Of - August 7, 2023
The Essential Elements of Business Contracts and Agreements - August 14, 2023
5 Questions Every Business Should Ask Before Starting a Partnership - August 21, 2023
What You Must Know About Company Structure and Formation - August 28, 2023