Insider Trading Laws

Federal securities laws broadly prohibit fraud in the buying and selling of securities, including illegal insider trading. The Securities Exchange Act of 1934 specifically addresses insider trading in Section 16(b) and indirectly in Section 10(b).

Section 16(b) of the Exchange Act is meant to stop insider trading by those most likely to have important corporate information. Except in limited circumstances, the Act prohibits “short-swing profits” (profits gained in less than six months) by corporate insiders in their own company’s stock. This applies only to company directors or officers and investors holding greater than 10% of the company’s stock.

Section 10(b) of the Exchange Act makes it unlawful for any person “to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” To implement Section 10(b), the SEC adopted SEC Rule 10b-5.

Under these laws and SEC Rule 10b-5, the SEC and harmed investors may bring civil or criminal lawsuits against companies and individuals for engaging in securities fraud.

SEC Whistleblowers

Gibbs Law Group encourages persons who know about possible securities violation to contact the firm. Under the SEC whistleblower laws promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act, whistleblowers may be receive a reward of up to 30 percent of the recovery for information leading to a successful enforcement action by the SEC and are protected from employer retaliation.  If you believe that you have information about a securities violation, please contact us by filling out the form at the right.