What is the difference between insider trading and investment fraud?

The difference between insider trading and investment fraud is that insider trading involves using confidential information while investment fraud is when you deceive investors in order to make money. Insider trading is when someone, who is a “insider” or has special, confidential information about a company, buys or sells stock of that company in order to make a profit. This is considered illegal because it gives the insider an advantage that other investors do not have. In contrast, in investment fraud, the investor deceives other investors, for example, by lying or exaggerating their services or the performance of investments in order to induce them to invest their money. Investment fraud can take many forms, such as Ponzi schemes, pyramid schemes, or false information about a company or security. Investment fraud is illegal under Washington state and federal laws, as it is considered a form of securities fraud. Both insider trading and investment fraud carry serious penalties, including financial restitution, fines, and potential jail time for repeat offenders or those that intentionally commit such fraud. It is important to be aware of the difference and the implications of each when investing, so that investors can protect themselves from being taken advantage of and losing their hard-earned money.

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What is the difference between insider trading and investment fraud?

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