What are the legal restrictions on insider trading?

Insider trading is the trading of a public company’s stocks or other securities by people who have access to confidential, nonpublic information about the company. Insider trading is illegal in Washington, as it is in all other states. To be considered illegal, the trading must take place in the context of a relationship of trust and confidence, and the insider must be aware of the confidential information when the trade is made. Under the federal securities laws, insiders are prohibited from buying or selling their company’s securities if they have access to material, nonpublic information about the company. The term “insider” includes officers, directors, and employees of the company, as well as anyone else with access to confidential information. It also applies to family members and friends of the insider. Securities laws also impose criminal liability on anyone who tips off or encourages a person to make an illegal insider trade. In addition, Washington state has its own securities laws that prohibit insider trading, and violators are subject to civil and criminal penalties. In general, insider trading is illegal because it undermines the public’s faith in the fairness of the markets and distorts the value of securities. It also creates an uneven playing field for investors, giving insiders an unfair advantage.

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What are the legal restrictions on insider trading?

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