Insider Trading Laws: Important Considerations

Key Aspects of Insider Trading Laws

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Question

Which of the following is/are true about insider trading laws?

I. Corporations cannot discriminate amongst recipients without risking insider trading liability.

II. Information provided to a group of analysts remains non-public till it is made available to investors in general.

III. If a member receives inside information that he deems material, the member must disseminate the information to the public as soon as possible and not trade on it to avoid insider trading charges.

Answers

Explanations

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A. B. C. D.

B

If a member receives inside information that he deems material, the member must: a. refrain from making decisions based on the information. b. encourage the firm to make the information publicly available. However, because the information is confidential, the member cannot unilaterally choose to broadcast it to the public. Indeed, he has an obligation not to personally disclose the information to an outsider.