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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RELATED FAQS
  1. What exactly is insider trading?

    An "insider" is any person who possesses at least one of the following: 1) access to valuable non-public information about ... Read Answer >>
  2. How often should I measure my company's key performance metrics (KPIs)?

    Learn the definition of illegal insider trading while reviewing the people who can be involved and the regulations and consequences ... Read Answer >>
  3. Can you accidentally engage in insider trading?

    Learn why it's possible to commit insider trading by accident, and why insider trading laws create logical inconsistencies ... Read Answer >>
  4. What's the difference between insider trading and insider information?

    Learn about insider information and insider trading and the differences between the two; both involve nonpublic information ... Read Answer >>
  5. What is the difference between open-market and closed-market transactions?

    Insiders often are blessed with owning a significant portion of a company's shares. This shared ownership is often in the ... Read Answer >>
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    Learn about whether writing a blog post about a stock you own is insider trading. Cracking down on inside trading is an important ... Read Answer >>
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