Securities Fraud: What Is Insider Trading, Exactly?
Since 2014, the news has been telling the story of Thomas C. Davis, the former chairman of Dean Foods, a professional gambler named Billy Walters and golf legend Phil Mickelson. According to the Justice Department and the SEC, these three men have been involved in an insider trading scam that netted Walters approximately $40 million in profits. Though Mickelson avoided being charged with a crime – he agreed to pay $1 million plus interest – Davis pled guilty to multiple counts of fraud and obstruction of justice. Now, Walters is on trial for insider trading; if he is found guilty, he faces decades of prison time and millions of dollars in fines. Insider trading is synonymous with securities fraud to most people, but not all transactions that fall under the guise of insider trading are actually illegal. If the people who own, operate and work for a company buy and sell their own stock to others within the company, this [...]