Government agency is responsible for protecting against the unethical practice

When does insider trading occur? What government agency is responsible for protecting against the unethical practice of insider trading?

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Sample Answer



Insider trading is the buying or selling of a security based on material nonpublic information. Material information is information that could affect the price of a security if it were known to the public. Insider trading is illegal because it gives the insider an unfair advantage over other investors.

Insider trading can occur in a number of ways. For example, an insider could buy or sell a security based on information that they learned from their job, such as a company’s upcoming earnings report. An insider could also give this information to a friend or family member, who could then trade on it.

Full Answer Section




The Securities and Exchange Commission (SEC) is the government agency responsible for protecting against insider trading. The SEC enforces the Securities Exchange Act of 1934, which prohibits insider trading. The SEC can bring civil charges against people who violate the law, and they can also refer criminal cases to the Department of Justice.

The SEC has a number of tools to investigate insider trading. They can subpoena records, interview witnesses, and conduct wiretaps. The SEC can also use algorithms to identify suspicious trading patterns.

The SEC has been successful in prosecuting insider trading cases. In recent years, the SEC has brought several high-profile cases, including cases against hedge fund managers and investment bankers.

Insider trading is a serious crime that can have a significant impact on the markets. The SEC is committed to protecting investors from insider trading, and they have the tools and resources to do so.

Here are some additional things to keep in mind about insider trading:

  • It is not only illegal for insiders to trade on material nonpublic information, but it is also illegal for them to tip others about this information.
  • Insider trading can be difficult to prove, but the SEC has a number of tools to investigate these cases.
  • Insider trading can have a significant impact on the markets, and it can lead to losses for investors who are not privy to the same information.

If you suspect that insider trading has occurred, you should report it to the SEC. You can do this by filing a complaint on the SEC’s website or by calling their hotline.

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