The strength of the economy depends on a strong stock market, and a strong market depends on investors’ confidence in its fairness. Insider trading weakens confidence.
The rules against insider trading are complex and the Securities and Exchange Commission devotes substantial resources to detecting it and punishing fraudsters. Still, this type of fraud persists.
If you lost money in the market and you believe insider trading was a factor, contact Silver Law Group. We are a national law firm representing investors who lost money due to fraudulent practices. Our attorneys can review your situation and discuss whether participating in a 10b-5 insider trading class action is the right strategy to help you recoup your lost investment.
Rule 10b-5 appears at 17 Code of Federal Regulations § 240.10b-5. The rule generally bars any attempts to manipulate or deceive the markets. One of the practices barred by this law is insider trading. Insider trading happens when someone with information not available to the investing public uses that information for their own benefit or the benefit of an associate. Some examples of insider trading include:
Any use of confidential information to profit in the market, at the expense of investors without access to the information, could be insider trading.
The Securities and Exchange Commission (SEC) monitors the market using sophisticated tools to detect and punish insider trading. Investors who suffered financial losses because of insider trading have legal remedies to recoup their losses. Silver Law Group represents investors who suffered losses or were cheated of profits due to insider trading under Section 10b-5.
Investors have the right to sue when they are defrauded, and many insider trading cases are litigated through class actions. Everyone who bought or sold a stock during the class period—the timeframe when the fraud was active—generally has the right to participate in a securities fraud class action lawsuit.
In most Rule 10b-5 insider trading cases, an insider has traded on non-public information that impacted the stock price. Frequently, one or more insiders initiated stock sales or purchases that appear to be based on foreknowledge of the correct information. The actions of the insiders weaken any claim the company makes that its misrepresentation was immaterial or unintentional.
Not every transaction an insider makes is illegal. Executives and others are allowed to trade in their company’s stock, but the activity must be transparent. Rules 10b5-1 and 10b5-2 set up a framework that allows people with confidential information to trade if they observe certain requirements. Silver Law Group can scrutinize the situation to determine whether there is evidence someone violated the rules of legal insider trading.
Despite the strict rules against insider trading and the existence of a mechanism for insiders to trade legally, violations of Rule 10b happen frequently. Misuse of confidential information introduces imbalance into the markets and harms investors who aren’t privy to the non-public information.
Contact Silver Law Group to discuss your legal options when you believe you were cheated. Many investors find that Rule 10b-5 insider trading class actions are an effective way to recover their losses. Reach out to us and schedule a consultation.