Insider Trading Compliance Training
Valuable or material non-public information that you learn as an insider must not be used to improve your own financial situation, and the use of such information to avoid a loss is also prohibited.
You need to comply with Insider Trading laws inside and outside the workplace. If you don’t, the consequences to you and your company could be severe.
The first step in staying risk-free is understanding what insider trading is.
Interactive Services’ online Insider Trading compliance training course will help employees stay risk-free and apply Insider Trading legislation to real-world situations and scenarios.
What Is Insider Trading?
Video: You are an insider at our company. Must not use MNPI to improve your financial situation. Severe consequences. Rules.
Scenario: A client sharing inside information.
Key Learning: If you find yourself in possession of commercially sensitive or inside information, remember that you cannot share or trade on what you know.
Scenario: Broker has been instructed to increase shareholding, but you now have inside information.
Key Learning: Be sure to never share inside information, even if it means withholding an explanation for your actions from friends, family, or professional relationships.
Scenario: Request to keep knowledge that colleague has inside information quiet.
Key Learning: Speak up! If you see a red flag, alert the appropriate department immediately.
Consequences of Insider Trading
Interactive Screen: Widespread insider trading would destroy confidence in stock market. Heavily regulated. External and internal penalties.
Scenario: Consequences of sharing inside information.
Key Learning: In addition to internal consequences, such as being demoted and even disciplined, employees who breach insider trading rules could face jail time, fines, and penalties.
Scenario: Consequences for individuals and companies found guilty of insider trading.
Key Learning: Internal consequences disciplinary action, demotion, and possibly termination. Impact on our company could include loss of license, loss of business, reputational damage, fines, and legal action.
Material Non-Public Information
Interactive Screen: What is non-public information? What is material information? Sharing inside information is just as illegal as acting on it.
Interactive Screen: Examples of material information; financial, operational, sales/product, regulatory/legal.
Scenario: Sharing information.
Key Learning: Much of the information you access within our company, although of varying levels of sensitivity, is unlikely to be in the public domain. Therefore, you should not share it with anyone.
Scenario: Sharing information.
Key Learning: Don’t take any risks with MNPI. Important and sensitive information is not for sharing. If information is both material and unlikely to be in the public domain, it should be considered sensitive.
Interactive Screen: Tippers and tippees. Penalties. Sharing information.
Scenario: First action to take if inside information is inadvertently shared.
Key Learning: If you inadvertently share material non-public information, telling someone “not to tell” will only make it more worthy of repetition. Reporting your breach to the Legal department is the best first step.
Scenario: Consequences of inadvertently tipping.
Key Learning: Don’t “tip off” by sharing MNPI. Speak up if you spot a red flag or breach.
Designations, Restrictions, & Trading Windows
Interactive Screen: Insider trading policy. Who does the policy apply to? Additional restrictions. Trading windows.
Scenario: Request to trade declined due to designation and events not yet public.
Key Learning: If your application to trade in company shares is rejected, your only option is to appeal the decision.
Scenario: Restrictions and family members.
Key Learning: Partners, children, and any other financially dependent members of a household are prohibited from trading. They also should not share any information they have with anyone.
Scenario: Partner has sold shares without realizing their partner was restricted from trading.
Key Learning: Speak up! Never delay in reporting a breach
Taking Action on Insider Trading
Summary screen that wraps up the module and attestation screen where learners attest that they will always adhere to Insider Trading policies.
Employees may not share “inside” information with others. If they do…that could be considered Insider Trading.
Insider Trading policy and legislation is so important to preserving fairness in the marketplace and to preventing fraud that there are global laws to prevent Insider Trading.
For example, Insider Trading has been illegal in the UK since 1980. In the European Union (EU), the Criminal Sanctions and Market Abuse Directive was adopted in 2014 to standardize criminal sanctions for Insider Trading.
In the US, Insider Trading is governed by the SEC. If employees share inside information, or use it to buy or sell shares, they are likely to be breaching Insider Trading rules and could face severe reputational, legal, and professional consequences. That is why employees need rigorous and thorough compliance training on Insider Trading.
Insider Trading is aggressively investigated and prosecuted. It is heavily regulated, monitored, and punished. It is one of the most aggressively investigated and prosecuted areas of trading law.
Interactive Services’ compliance training program will teach employees the key elements of Insider Trading, such as how to handle non-public information or information that is in the “public domain.” Information is deemed material if it gives you (or someone else) an unfair advantage when you (or they) trade in stock.
Sharing inside information or material non-public information can be just as illegal as acting on it yourself.
Each employee in a company can be affected by Insider Trading laws, so we have created a training program that reflects these laws and keeps your company safe. Certain employees are more likely to come into contact with material non-public information (MNPI). These “designated” employees might even be monitored by the US Securities and Exchange Commission (SEC). mEmployees should always know their trading designation and whether trading windows affect them.