What is Insider Trading?

Charlotte Criminal Lawyer Brad Smith answers the question: “Do I need to hire an attorney if I have been falsely accused?”


A recent report indicated that Congressman Madison Cawthorn may have broken the law by participating in an alleged insider trading scheme involving cryptocurrency. Lawmakers called on Congress to investigate Rep. Cawthorn’s activities.


whisper-Charlotte-Monroe-Mooresville-Criminal-Defense-Attorney-300x200What is Insider Trading?


Insider trading refers to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading laws prohibit investors from profiting from non-public information.

The scope of insider trading is broad. Insider trading cases may be brought against corporate officers, directors, and employees who trade corporation securities after they learn important confidential information.

Often, insider trading may involve some act of “tipping.” “Tipping” may consist of telling someone some sort of secret information about a company or security not available to the public. The recipient of that non-public information may then be motivated to execute some sort of transaction with the inside information, such as buying or selling stocks or securities that could be impacted by the information.

Insider information could range from anything from changes in a company’s management to potential litigation involving a company to new innovative products not yet disclosed.

The recipients of the non-public information – “tipees” – could be friends, family, or business associates of individuals who possess and divulge inside information. Sometimes, the individuals who obtain the inside information are professionals who learned the information through business, such as bankers, lawyers, brokers, or even government employees.

Insider trading is a federal offense. Allegations of insider trading may be investigated by the Securities and Exchange Commission, the Department of Justice, or both. Those accused of insider trading may face civil penalties, criminal charges, or both. Individuals convicted of insider trading can face up to 20 years imprisonment.


Contact Arnold & Smith, PLLC

If you or a loved one has been accused of or arrested for insider trading, you should speak with a defense attorney as soon as possible. At Arnold & Smith, PLLC, our experienced attorneys can review the allegations or charges and guide you on how to best proceed. Please contact us today to get a phone, video or in-person consultation by calling at (704) 370-2828 to speak with our detail-oriented and well-versed lawyers with offices in Charlotte, Lake Norman, and Monroe, please contact Arnold & Smith, PLLC today or find additional resources here.







The criminal defense attorneys at Arnold & Smith, PLLC make it their mission to zealously defend their clients on a wide range of criminal matters at both the state and federal levels. These matters may include any charge from traffic offenses; DWI/DUI; drug charges (from simple possession to possession with intent to distribute and trafficking); gun permit denials; weapons offenses; and property crimes (larceny, breaking and entering, robbery, fraud, embezzlement, white collar offenses); to sexually related offenses (indecent exposure; sexual assault, crimes against nature, removal from sex offender registry); and violent crimes (domestic violence; assault; manslaughter; homicide, murder). Other legal issues that Arnold & Smith, PLLC criminal clients may be facing include restraining orders, restraining order and probation violations, expungements; appeals; and immigration issues related to criminal charges. Our criminal defense attorneys are passionate about ensuring that individuals empower themselves by being informed about their constitutional rights, and stand at the ready to fight in the defense of those facing criminal charges.






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