What is the difference between insider trading and investment fraud?

Investment fraud and insider trading are two distinct kinds of financial misconduct. Investment fraud is the act of misrepresenting or concealing material facts or providing false information in order to induce an investor to make an investment decision. Insider trading, on the other hand, is the trading of securities (stocks, bonds, etc.) by someone who has access to material, nonpublic information about the security or the issuer. In order to be considered investment fraud, the individual must have misrepresented or concealed material facts or provided false information. This could include lies about the value of the investment, the risks associated with the investment, or the management of the funds. The goal of insider trading is to use confidential, nonpublic information to gain an unfair advantage in the stock market. Insider trading is usually conducted by someone who has access to inside information such as company executives, brokers, and analysts. Investment fraud is illegal under California state law and can result in civil and criminal penalties as well as reputational damage. Insider trading is illegal under both federal and state law and could result in stiff civil penalties, jail time, or the suspension of any brokerage account held by the individual. Both types of misconduct can have serious consequences for the people involved as well as investors.

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What is the difference between insider trading and investment fraud?

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