What are the legal restrictions on insider trading?
Insider trading is an illegal activity in the state of Hawaii, as in other states, and is taken seriously by the federal government. Insider trading occurs when someone uses confidential information they have access to as a result of working in a certain company for their own financial gain. This information is usually not available to the public and should not be shared, leaving investors at an unfair disadvantage. The Securities and Exchange Commission (SEC) in Hawaii has laid out their definition of insider trading to ensure members of the public are aware of the laws and regulations surrounding the topic. The definition states that when a person knowingly buys, sells or trades a security while in possession of material information that is not known to the public, it is considered insider trading. The SEC also outlines the punishment for those found guilty of insider trading. These punishments can include penalties, fines, and potentially jail time. Depending on the gravity of the offense, people can be banned from acting as officers or directors of a publicly traded company. In Hawaii, the implication of these laws is that people who are in possession of material and nonpublic information are not allowed to use it for their own benefit or that of others. This type of information must remain confidential and protected as it has the potential to significantly influence the stock market.
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