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Insider trading harms all investors

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Insider trading occurs when a person learns of an event that is likely to affect a company’s stock price. The event may either have a positive or a negative impact on the stock’s price.

The individual must then make a trade based on information that is not available to the public. Most often, the perpetrators of insider trading are company employees or brokers. Insider trading harms all investors because the playing field isn’t level.

Often a big risk for a relatively small reward

People who engage in insider trading fail to see the significance of their actions. For a broker who trades in literally hundreds of millions of dollars a year, a trade in the tens of thousands may seem like peanuts.

Those of a certain age will recall when Martha Stewart was convicted of insider trading. Her act of insider trading involved just $45,000. However, she still served time in prison and paid a significant amount in fines.

Of course, it doesn’t matter if the insider trading involved pennies or tens of millions of dollars. It’s illegal and taints those who play by the rules. The Securities and Exchange Commission (SEC) tends to focus the bulk of its resources on wealthy investors and high-profile cases. Unfortunately, individual investors who often entrust the bulk of their life’s savings to a broker usually suffer the greatest harm.

If you’ve suffered significant financial losses due to possible acts of insider trading, you don’t have to rely on the SEC to act. A professional who has experience handling claims of broker misconduct and securities litigation can help you explore your available legal options.