Since the average person goes daily to his work, to feed himself and his family, stutters every month, the fixed costs and, considering what he do with his remaining money could still, if now anything left to save on stays. After much back and forth is believed to have finally found a suitable opportunity in the market for high returns information, and put his savings into securities with hope for a profitable future. Of course, the promise of high profits, a certain risk-taking that you have to make due to the ongoing crises but in any form of investment. So one uses the knowledge from newspaper, radio and television, and painstakingly built up a portfolio of securities or trusts in doubt, at least for someone who offers this service. However, the values do not risk what they have promised. On the contrary, the price falls and falls. The invested money is gone and the “small” investors tearing their hair, while others rub their hands: the insider.
Who is inside and who is not?
The above-described situation is obviously far-fetched and hopefully finding in this simple form no real application in the real world. But it is only the simplistic picture that can show up frequently and move the hard-earned money into the pockets of the ignorant who know. For it is precisely those who know their information advantage, sometimes shamelessly use to enrich themselves at the expense of others. Even if it wanted to see the perpetrator himself may not always be so, it is in insider trading is a statutory offense may result in the five years’ imprisonment or a fine by itself. In this knowing there are so-called insiders, pull the unauthorized personal benefit from their superior knowledge. Who is an insider of a publicly traded company now and who is not, is clearly regulated by law. Shall be deemed to constitute insider persons who are involved in some form in the capital of a company or the result of their role in the company sensitive information, which are not accessible to the public. The second group includes, for example, board members or members of the Board. In addition, can also get people that meet a specific task in a company to insider information. As examples, only lawyers and management consultants were called. The last option in the group of so-called primary insiders, that is those who get their information directly from the source, the stealing of information about a company. In such a case per se, there is already an offense in the stock market is almost aggravated. Considered by law as secondary insiders then according to all the people with insider information that has been preserved in other ways, for example, by kinship, friendship or love affair with a primary insider.
That is why insider trading is prohibited
Insider transactions are inside information means information that is suitable for public becomes known to influence the market price of a company. The simplest example might be called a pending bankruptcy. If they threaten a company, the insider simply sell all the securities and make little or no losses, while the ordinary investors learn only through public media of the bankruptcy and massive losses suffered in part, perhaps, in his hard-saved capital needs. And just so this does not happen and everyone has on the stock market playing field the same opportunities, insider trading is prohibited in the stock market. Under paragraph fourteen of the Securities Exchange Act includes the prohibition of both the buying and selling securities on inside information. Also prohibited is the disclosure of such information to third parties and the recommendation of purchases or sales on the basis of the information. Such inside information may be planned acquisitions, unexpected gains and large contracts or even the latest research results.