The playing field for traders needs to be kept as level as possible. This is for the benefit of citizens in California and the rest of the U.S. Any attempt to trade via information that has been received in an illegal fashion should be subject to prosecution. This applies with special force to nonpublic information that is received via insider trading.
Insider trading is a continuing menace
Trust misappropriation is the legal principle that forms the basis of convicting people who have been found guilty of insider trading. This is a practice that boils down to nonpublic information being received and used for one’s own financial benefit. Although clearly illegal, insider trading continues to be a major source of trouble for the market.
It is illegal to commit any kind of breach of duty to the shareholders of a company. This applies equally to all members of a corporation. Trading or seeking to trade “inside” information of any kind will constitute such a breach. Should this occur and then be discovered, the principle of misappropriation theory will apply. Punitive measures will be enforced.
Insider trading is very easy to commit
Trust misappropriation is a crime that falls under the heading of defalcation. You don’t have to be a part of any grand conspiracy to commit this type of fraud. It can be as simple as overhearing your friends discussing an upcoming merger. You can act on the information received to benefit your portfolio. Without even realizing it, you have committed an act of insider trading.
The best way to avoid this kind of pitfall is to deal with a reputable financial advisor. They can give all of the advice you need to keep your portfolio healthy without having recourse to the illegal remedy of insider trading.