Foreign ExchangeInsider trading is something we all hear a lot about in the news.  We see pictures of highly regarded company officials being hauled off to jail for their actions.  However, we only hear about illegal insider trading, when in fact, some insider trading is legal.  Legal insider trading is when corporate insiders, such as employees, directors, and officers, buy or sell stock in the company for which they work.  When they do this, they must report the trades to the SEC.  On the other hand, illegal insider trading is buying or selling stock based on information that is not public knowledge.  It is a breach of confidence or fiduciary duty when using private knowledge or nonpublic information to make a purchase or sale of any securities while in possession of the material.  Forensic accountants at HSNO are trained to discover and investigate all forms of insider trading to determine if securities trades were legal or illegal.

Here are a few examples of illegal insider trading:

  • Any corporate employees, directors, or officers making trades of the company’s securities based on information they have learned regarding confidential developments about the company
  • If a friend, family member, business associate, or any other person told about confidential information makes a trade of the company’s securities
  • Any employee of the law, printing or brokerage firms, or banking who become aware of any confidential company knowledge and then make trades based on that information
  • A government employee who trades securities because of information they have obtained through their government job.
  • Any other person who took advantage of or misappropriated confidential knowledge from their employers.

The SEC takes all cases of insider trading very seriously because this crime undermines the integrity and fairness of the securities market.  Those who take advantage of the system must be discovered and prosecuted.

In order to be prosecuted by the SEC, the accused must have been aware of the nonpublic information when the trading occurred.  There are some exceptions to this rule, such as the information was not a factor in decision to trade, a pre-existing contract or plan was already in place, or they were following an instruction on good faith.  However, if these circumstances do not exist, our forensic accountants will be able to determine the extent of the insider trading.  We will be able to discover all evidence that is needed and available to determine if illegal insider trading has occurred within your company, and we will provide all of the necessary documentation needed for court.