Bruce Brumberg
Whether you think that Martha Stewart was guilty or innocent, or that the government should not have brought criminal charges against her, she made a number of rash mistakes that we all can learn from to avoid civil or even criminal charges of insider trading.
Merrill Freed and Steven Schraibman
Your advisors say now is the time to buy or sell your company stock or to exercise options. But before you proceed, you'd better understand the securities laws that apply. Otherwise, you risk losing your profits, paying big fines, attracting unwanted media attention, and perhaps even going to jail. The storm of controversy over the backdating of stock option grants shows how closely executive stock sales are scrutinized.
Bruce Brumberg
myStockOptions.com
Editor-in-Chief Bruce Brumberg developed this PowerPoint presentation for talks and meetings on insider trading. With colorful examples from recent cases, it covers fundamentals, penalties, Rule 10b5-1 preapproved trading plans, and lessons that the cases of Martha Stewart/ImClone and Joseph Nacchio/Qwest can teach. (Premium members can view the presentation in PDF from the above link and may request permission to use it at their companies. Please allow up to a minute for the presentation to fully appear in your browser.)
Julius Melnitzer
Inside Counsel
The SEC's intensified search for insider trading includes enhanced scrutiny of Rule 10b5-1 trading plans.
Bob Drummond
Bloomberg.com
A large volume of corporate acquisitions and well-timed investments in target companies has set off alarms about insider trading at the SEC and in stock exchanges around the world.
Kathleen Pender
San Francisco Chronicle
Know the laws of insider trading before you sell your company stock. Many who have been caught and prosecuted for insider trading did not feel that they were doing anything wrong. It's easy to prevent similar mistakes.
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Insider trading, which is illegal, occurs when someone possesses inside information about an important but secret development at a company and then trades that company's securities to gain an advantage from the movement of the stock price that will occur when the information is made public...
Tipping is telling someone material confidential information about a public company, whether in...
Insider trading violates the basic philosophy of fair capital markets...
The SEC has reciprocal agreements with many countries...
The rules apply to any confidential, important information that you reveal to anyone about your company. The SEC adopted...
The law is evolving on this question of "use" versus "possession" of information. The SEC adopted rules in late summer 2000, but they are untested...
Yes. Your intentions do not matter...
To detect irregular patterns of trading, each stock exchange uses a surveillance operation...
When irregular trading activity is detected in a company's stock, all transactions made during the period under review are scrutinized...
No. Unless someone who is part of a scheme confesses, as in the movie
Wall Street, direct proof rarely emerges...
Yes. A witness who lies under oath...
Most insider-trading cases involve civil suits and penalties...
Anyone found liable for trading on inside information must pay the federal government...
The Justice Department and local United States attorneys' offices, not the SEC, have the authority to bring criminal prosecutions. Under Section 32(a) of the Securities Exchange Act, as amended by the Sarbanes-Oxley Act of 2002, individuals face up to 20 years in prison for criminal securities fraud and/or fines of up to $5 million for...
Generally, no violation occurs if you receive a grant of stock options when you know secret stock-price-moving information about your company. However, the SEC has focused severely in recent years on...
If you exercise stock options when you know secret stock-price-moving information about your company, the exercise itself is not a violation, according to most experts. However, selling the stock at exercise, as in a cashless exercise/same-day sale, when you know confidential information about the company would almost certainly be considered insider trading. Examples...
After the information is publicly disclosed, you should wait a reasonable amount of time for...
Blackout periods are times when you are prohibited from trading your company's securities, and window periods are times when you are allowed to trade. Some companies also prohibit...
Most companies do not prohibit exercises of stock options during blackout periods, because the purchase price...
To prevent insider trading, and to reduce the need to constantly monitor and evaluate...
The rules do not apply only to trades in your company stock while you are working for the company...
You cannot be charged just for the vesting of restricted stock, as no sale of securities occurs. However...
Whether you trade your company stock in your regular brokerage account or in...
Wrongly using information you learned on the job to buy stock in another company is still insider trading...
Yes. Courts have the authority to bar you from corporate office or directorship if your conduct demonstrates...
Under Section 21A(e) of the Securities Exchange Act, the SEC may award...
Using a blind trust goes beyond the protections of Rule 10b5-1 plans, yet has more restrictions. These are irrevocable grantor trusts with...
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