The reason insider trading is illegal is that one person, or group of people have an unfair advantage over others. In the perfect world no one would know more than anyone else. Obviously the world is not perfect.
Naturally some people must know information before it is made public. Businesses are continually evaluating opportunities and discussing strategies behind closed doors. This is not illegal. The reason insider trading las have been created is to help ensure that those who are part of these discussions cannot unfairly profit from that prior or ‘inside’ knowledge.
The dramatic increase in online trading and buying shares has meant insider trading is no longer restricted to an elite group of business owners and their close friends. While a criminal insider trading case may be difficult to prove the financial services industry in Australia has gone through many changes over recent years. The restrictions on giving financial advice are complex. The need for clear documentation and explanations around advice given has increased dramatically. Simply asking your friends “what’s the best shares to buy” is no longer so simple.
In this video below it gives advice on what to do if you suspect insider trading. It also suggests you walk away rather than be tempted to make use of inside information you may have received.
Other Insider Trading articles
Insider trading suspected in major USA mergers
Insider trading stock tips at family reunion
What is insider trading?
Decriminalising insider trading proposal
Legal and illegal insider trading
