Definition of Insider Trading and Securities Fraud Enforcement Act of 1988
Insider Trading and Securities Fraud Enforcement Act of 1988 is Federal legislation, which made penalties for people trading on material nonpublic information more severe. Penalties for insider traders are up to the greater of 300% of the amount of money made or the loss avoided, or $1,000,000 and up to 5 years in prison. People who disseminate inside information may be imprisoned and fined up to $1,000,000.
Applying "Insider Trading and Securities Fraud Enforcement Act of 1988" to Securities Exams:
Trading on inside information has always been illegal and a violation of The securities Exchange Act of 1934. The insider trading act of 1988 set stricter penalties for both the tipper and the tippee. insiders are considered to be lawyers. accountants. officers, directors large stockholders and anyone who is in possession of non public material information. It is not illegal to be in possessed of non public information but it is a violation to trade on or to disseminate the information.