Let us imagine that you are on the Board of Directors of a large corporation, and at a board meeting you learn that the corporation is going to purchase a smaller competitor, which is a public company. Your corporation's intent to do so has not be publicly announced, and you realize this is the perfect opportunity to make some money. So, the next morning you call your stock broker and buy 10,000 shares of the target company's stock.
And, after the announcement you sell that stock for a $56,000 profit. Pretty smart investing, right?
Well, readers of our blog know better. This is the classic case of insider trading, and the board member pled guilty to criminal charges of insider trading, agreed to pay back his profits of $56,000 plus a penalty of $55,000, and was sentenced to 24 months of probation, 9 months of which are to be served by home confinement. The press reports that he also lost his position on the Board of Directors, and then there is the public shaming by virtue of multiple press reports about the charge and plea.
Original story at Yahoo! Finance
Sallah Astarita & Cox is a securities law firm which represents investors and brokers across the country in SEC and FINRA proceedings and white collar criminal actions. If you need a securities attorney for an insider trading case, or any securities related matter, call their office at 212-509-6544 or visit their web site
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