Help employees understand what counts as insider trading, who can be charged, and how to keep confidential company information from being misused.
Insider trading is one of the most serious violations of securities law, undermining the fairness and integrity of financial markets. This course provides a comprehensive overview of what constitutes insider trading, why it's illegal, and the severe consequences for individuals and organizations that engage in it. Participants will learn how insider trading works, including the use of material non-public information to gain unfair advantages in securities trading. The training covers real-world examples of insider trading violations, the legal framework that prohibits such conduct, and the civil and criminal penalties that can result, including massive fines, imprisonment, and permanent damage to professional reputations. Employees will understand their responsibilities to protect confidential information, recognize situations that could lead to insider trading violations, and learn the proper procedures for handling sensitive financial information. This course is essential for anyone who has access to confidential business information, works in financial services, or makes investment decisions, ensuring they understand how to stay compliant with securities laws and avoid costly legal consequences.
Insider trading training is for corporate officers, directors and employees who may learn confidential information about earnings, deals or products. Finance, legal, sales and executive support staff often have that access. Insider trading laws also reach family members and friends who receive tips. The 6-minute English video covers the essentials quickly.
Insider trading is prohibited mainly by Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The Securities and Exchange Commission brings civil enforcement actions, and the Department of Justice prosecutes criminal cases. Companies also adopt insider trading policies with blackout periods and preclearance rules.
Sharing a confidential stock tip with a friend or family member can be illegal insider trading, often called tipping. The person who passes along material, nonpublic information and the person who trades on it can both face charges. The tipper can be liable without making a trade.
Employees can legally trade company stock when they have no material, nonpublic information. The trade also has to follow company policy, such as an open trading window. Insiders can also trade under a pre-arranged Rule 10b5-1 plan adopted in good faith. Officers and directors must report their trades to the SEC.
Insider trading penalties include prison time, criminal fines and civil penalties of up to three times the profit gained or loss avoided. Violators also typically lose their jobs and professional reputations. The SEC uses sophisticated market surveillance to spot suspicious trades, so insider trading is often detected.
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