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.

RELATED TERMS
  1. Insider Trading Sanctions Act Of ...

    Legislation that allows the SEC to seek a civil penalty, of up ...
  2. Signaling Approach

    The idea that insiders have information not available to the ...
  3. Inside Sales

    Inside sales is the sale of products or services by personnel ...
  4. Inside Market

    The inside market is the spread between the highest bid price ...
  5. Securities And Exchange Commission ...

    The Securities and Exchange Commission (SEC) is a U.S. government ...
  6. Poop

    A slang term often used to describe inside information or people ...
Related Articles
  1. Insights

    How The SEC Tracks Insider Trading

    We look at how the SEC tracks and tries to stop insider trading - a seemingly impossible task.
  2. Trading

    Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.
  3. Investing

    When Insiders Buy, Should Investors Join Them?

    Insider trading activity can inform your investment strategy, but it requires research and a level head. Here's what to look for as insiders buy and sell.
  4. Trading

    Defining Illegal Insider Trading

    The better you understand why insider trading can be criminal, the better you'll understand how the market works.
  5. Insights

    Why Insider Trading Is Bad for Financial Markets

    Insider trading can come in many forms, some of them even legal, with the benefits and costs often debated by practitioners and academics alike.
  6. Investing

    Insiders Selling Nvidia Stock

    As insiders sell Nvidia, should shareholders be concerned?
  7. Insights

    The 3 Biggest Penalties for Insider Trading in the U.S.

    The three large penalties for insider trading in the United States have been handed down in recent years, leading to civil and criminal charges for the culprits.
  8. Insights

    Understanding the SEC

    The SEC's triple mandate of investor protection, maintenance of orderly markets and facilitation of capital formation makes it a vital player in capital markets.
RELATED FAQS
  1. What exactly is insider trading?

    Two common misconceptions are that all insider trading is illegal and that insider trading and insider information are the ... Read Answer >>
  2. What happens to the fines collected by the Securities and Exchange Commission?

    When the Securities and Exchange Commission (SEC) enforces a civil action against a corporation or an individual found guilty ... Read Answer >>
  3. Does the IRS charge interest on penalties?

    Understand whether or not the IRS charges interest on penalties. Learn about the types of penalties that can be assessed ... Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center