Insider trading sounds like something that only happens on Wall Street, but it can happen anywhere. If you trade stocks or work for a company that issues them, you need to know what counts as illegal activity.
Understanding insider trading
Insider trading happens when someone buys or sells a stock using material, non-public information. That means information the public doesn’t know but could affect the stock price. Think earnings reports, major deals, or leadership changes. If you learn something before the public and trade on it, that can break the law.
It doesn’t matter how you get the information—whether you’re an employee, contractor, or a friend of someone who works at the company. If you act on it before it’s public, it can lead to serious consequences.
Legal vs. illegal insider trading
Insider trading isn’t always illegal. Employees can buy or sell stock in their own companies, but they must follow strict rules. Companies often have blackout periods or require pre-approval. When trades happen with full transparency and after the information is public, it’s allowed.
The illegal kind happens when someone tries to get ahead by using a secret. This could include tipping off a friend or family member. Even if you don’t work for the company, trading on private information can still lead to charges.
How Georgia handles insider trading
While most insider trading cases fall under federal law, Georgia can pursue charges under its own securities laws. Georgia’s Uniform Securities Act makes it illegal to defraud or mislead anyone when offering or selling securities. This includes using non-public information to gain an unfair advantage.
The state can investigate and prosecute these cases, especially if the trades affect Georgia-based businesses or investors. If you’re involved in the market, it’s smart to understand both state and federal rules.
Stay smart with your trades
You don’t need to be a stockbroker to face insider trading charges. Just one bad decision can lead to fines or worse. If you hear something that isn’t public, wait until it is before making a move. Understanding how it works can help you if you face charges.
