Managing Insider Trading Risk – CEO Perspective


Company insiders or executives their positions in companies tends to place them more at risk than ordinary employees when it comes to Insider Trading. As they’re the ones considered to be those who place the trades and this can be a common risk to the directors and upper management. Placing them guilty and can be convicted of insider trading, especially when some kinds of trading based on insider information are considered to be illegal.   

Another risk for officers and directors is that they can be liable as controlling persons if they are reckless in not preventing insider trading by their employees. Having corporate rules and prearranged plans in place can help CEO’s of companies manage insider trading risk.  

In addition to that there are also laws against insider trading and tipping, where you should follow your company’s rules about blackout and window periods. As timing is everything with Insider Trading and it can mean a thin line between it being considered legal or illegal insider trading. 

Another advice would also, be to consider setting up a Rule 10b5-1 trading plan for prearranged sales. If you know you want to sell stock in the future but may know secret inside information at those times. 

When you a corporate insider trading in your own securities by buying and selling stock in your own companies. Report your trades to the necessary financial regulators within your country as this helps you to manage Insider Trading risk.  

The Securities Exchange Commission (SEC) is a financial regulator that’s enforced by the United States (U.S.) securities law. It has rules to protect the investment from the effects of insider trading. The SEC has agreements with many countries throughout the world and this gives the SEC access to people who violate U.S. securities law outside the U.S. 



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