Facts Behind Insider Trading
Insider trading is trading a corporation’s stock or other securities by individuals with access to non-public information about the company. Non-public information is all the material information that may impact an investor’s decision-making on whether to sell or buy the security.
However, insider trading can be controversial with many differing opinions. Some believe it is a necessary part of the free market, while others view it as a form of cheating. According to Jordan Sudberg, a pain management specialist, there are some facts that everyone should know about insider trading.
What are Sudberg’s facts behind insider trading?
Mr. Sudberg believes insider trading is when people with access to privileged information use that information to buy or sell stocks. It can be done legally if the information is publicly available or illegally if the information is not publicly available.
Insider trading is often seen as negative, but Sudberg says it has some benefits. For one, it can help people make informed decisions about investments. Sudberg says that insider trading can also help to level the playing field between large and small investors.
Of course, there are also some risks associated with insider trading. You could face legal penalties if you use insider information to make trades. Additionally, even if you don’t face legal penalties, you could still lose money if the stock market doesn’t perform as you expect it to.
Before making any decisions about insider trading, Jordan Sudberg says you should speak with a financial advisor. They can help you understand the risks and benefits of insider trading, and they can help you make the best decisions for your investment portfolio.
Hypothetical Examples of Insider Trading according to Jordan Sudberg
There are two types of insider trading:
1. Illegal
Illegal insider trading is when someone trades based on material, non-public information. It could be information about a company’s financials, upcoming products, or mergers and acquisitions.
2. Legal
Legal insider trading is when someone trades based on publicly available information.
Ways in Which Insider Trading Happens
Insider trading can happen in a few different ways. They are:
- When someone with inside information buys or sells shares of a company’s stock.
- When someone who knows someone with inside information trades on that information.
Sudberg acknowledges that insider trading is difficult to prove because there is often no direct evidence. Prosecutors have to rely on circumstantial evidence and try to prove that the trader had access to material, non-public information.
Ways of Preventing Insider Trading
- A code of conduct prohibits employees from trading on material, non-public information.
- Establishing a “Chinese wall” between the people who have access to non-public information and those who make trading decisions.
- Having a policy that requires employees to disclose their trades.
Final Word
Sudberg terms insider trading as a complex issue and that there are a lot of different opinions on it. Some people think it’s a victimless crime, while others think it’s a serious offense that hurts the integrity of the markets.