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Drawing a fine line between legal and illegal insider trading

Whether they realize it or not, many St. Louis residents have certain stereotypes and misconceptions that they turn out not to be true. Often times, individuals do not realize these misconceptions until they become personally involved with a situation that changes their perception.

In the criminal justice system, these misconceptions are common, and many individuals may not realize the truth until they have been personally charged with a crime. This is particularly true when it comes to allegations involving conspiracies and white collar crime.

For instance, many individuals may have heard of the phrase insider trading, but they may not understand that there are both legal and illegal forms of insider trading. According to the United States Securities and Exchange Commission, it is legal for including officers, corporate insiders, directors and employees, to buy and sell stock in the companies they work for. There are certain requirements that may apply to these trades, such as filing reports of trades with the SEC.

On the other hand, if a person breaches a relationship of trust in buying or selling a security, while they have possession of material and private information about the security, this may be classified as illegal insider trading. There have been high profile cases over the years that have alleged this kind of insider trading, including cases involving celebrities and other high profile figures who are alleged to have violated insider trading laws.

At the same time, the SEC has had to issue certain rules to clarify whether it is illegal to engage in insider trading in certain circumstances. Accordingly, there may be a fine line between legal and illegal conduct, which can make all the difference when a person is improperly charged with engaging in illegal insider trading.

Source: United States Securities & Exchange Commission, "Insider trading," accessed on Jan. 3, 2015

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