What are the legal restrictions imposed on insider trading?

Insider trading is the buying and selling of securities (such as stocks, bonds, and mutual funds) by an individual who has access to material, non-public information about the company or security. The law restricts this conduct because it gives the insider an unfair advantage in the market. In Washington State, the legal restrictions imposed on insider trading are governed by the state’s Securities Act. According to the law, an individual cannot purchase or sell a security while having access to material information about that security or company which is not available to the public. Additionally, the law prohibits individuals from giving advice to others to buy or sell a security if the individual has access to material information that is not available to the public. Additionally, the law prohibits a person from trading in a security if the person possesses material, non-public information about the security or company. It is important to note that trading on non-public information is illegal regardless of whether or not the individual actually used the information to complete the transaction. Therefore, it is important for all individuals to understand the legal restrictions of insider trading. Washington State also prohibits individuals from “tipping” or revealing material, non-public information to others who then use that information to buy or sell securities. This is considered to be a violation of the state’s securities laws as well. All individuals must be aware of the legal restrictions imposed on insider trading in order to avoid possible civil or criminal penalties. If an individual purchases or sells a security in violation of the law, the individual could be subject to fines or a prison sentence. Furthermore, the individual must also repay any profits made from the illegal transaction.

What are the legal restrictions imposed on insider trading?

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