Insider Trading Act of 1988

DEFINITION of 'Insider Trading Act of 1988'

An act enabled in 1988 to increase the liability penalties to all involved parties to insider trading. This act was established due to the increase in high profile insider trading cases, as well as the increase in monetary values of the trades. The act allows the SEC to order a penalty of up to three times the profit, and the guilty parties may serve significant jail time according to the extent of their crime.

BREAKING DOWN 'Insider Trading Act of 1988'

Insider trading occurs when members outside of the establishment are given information which is not available to the public as a whole, and use it to increase their wealth through buying/selling stock.

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