Who can be held liable for insider trading?

Individuals can be held liable for insider trading if they misuse material nonpublic information to gain an advantage in trading stocks. This includes corporate officers and directors, as they typically have access to sensitive information that is not available to the general public. When these individuals exploit this information for personal gain, they violate securities laws, which are designed to maintain a fair trading environment.

The responsibility for adhering to these laws extends to anyone who has access to material nonpublic information. Thus, corporate officials like officers or directors are held to a high standard because they are expected to uphold fiduciary duties to shareholders. This means they must not engage in trading based on insider knowledge, as it undermines the integrity of the market.

Understanding this liability helps underscore the importance of transparency and fairness in the financial markets. It reinforces ethical standards for market participants and protects investor interests.