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Be careful that using your hot tip is not insider trading

Those who make money trading securities are often on the lookout for a tip or some other indicator that investment could turn a tidy profit. And while doing research and looking for clues as to an investment's viability is fine, it is important to avoid engaging in a white-collar crimee known as "insider trading."

Typically, illegal insider trading refers to the sale or purchase of a security while possessing information that has not been made public about the security. The Security and Exchange Commission takes the policing of insider trading violations very seriously. The SEC does this in order to help maintain the confidence of investors who need to believe that no one has an unfair advantage when trading in the securities markets.

Acts of illegal insider trading can take place among corporate executives who are privy to confidential data. It can also occur among those who are less highly placed in the corporate hierarchy. For example, if a corporate executive passes on confidential information to friends or family members, those friends or family members could be committing an illegal act if they use that information as the basis of a securities transaction.

Getting or giving a hot investment tip is fine, just so long as that tip does not entail the use of information that can give a buyer or seller an unfair advantage. But given that such information could be so readily communicated, it might be very easy to commit an act of illegal insider trading.

If you are ever accused of illegal insider trading, it may help you if a Louisiana white-collar crime attorney looks into the matter. The attorney may be able to demonstrate that your actions were exempted under SEC regulations. The attorney could also help you plan a defense to answer the charges.

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