DON'T BE GUILTY OF TRADING INSIDE INFORMATION TO MAKE A QUICK BUCK

Over the years there have been some securities professionals whom the SEC has accused of illegally using inside information to make gains on trading stocks. Don't allow yourself to fall into this trap. It could ruin your career in the securities business, as well as subject you to fines, civil penalties, and even criminal convictions.

FINRA specifies in its Content Outline for the Securities Industry Essentials exam that you should expect questions about Insider Trading on the exam. See SIE Content Outline, Section 3.3.2.

Bob Eder discusses insider trading in detail in his Study for the Securities Industry Essentials Exam. Here is a sample of Bob Eder's treatment of using inside information:

EXAMPLE

Jason, a hedge fund manager, is managing several billions of client monies. He asks for and receives confidential information about XYZ Corp.’s forthcoming earnings from Bill, a friend, who happens to be on XYZ’s board. Bill tells Jason that XYZ will unexpectedly report very good earnings. Five minutes after his conversation with Bill, Jason instructs his traders to purchase 100,000 shares of XYZ. Later, investigations show that many of the investors who sold XYZ shares to Jason’s firm were small mom-and-pop investors. Would they have sold their XYZ shares to Jason if they had known of the forthcoming earnings bonanza?

Here is the link to FINRA's Content Outline for the SIE exam. See the references to Inside Information in FINRA's Content Outline, section 3.3.2.

Study for the Securities Industry Essentials (SIE) Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's book on Amazon.

For questions about Bob Eder's SIE manual, Study for the Securities Industry Essentials (SIE) Exam, or questions in general about the SIE exam, or about Inside Information, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. See Bob Eder's Author Page on Amazon.com.

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