SEC Charges Former Citigroup Employee with Insider Trading
The Securities and Exchange Commission (SEC) today announced that it has charged a former Citigroup employee with insider trading.
According to the SEC's complaint, the former employee, Michael Nikolaou, learned about upcoming changes to Citigroup's stock rating from a friend who worked at a research firm. Nikolaou then used this information to buy Citigroup stock before the changes were announced, and he made a profit of over $20,000.
The SEC's complaint alleges that Nikolaou violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking disgorgement of Nikolaou's profits, prejudgment interest, and civil penalties.
What is insider trading?
Insider trading is the buying or selling of a security based on material nonpublic information. Material nonpublic information is information that could affect the price of a security if it were known to the public.
What are the penalties for insider trading?
The penalties for insider trading can be significant. Individuals who are convicted of insider trading can face fines of up to $5 million and/or up to 20 years in prison.
What can you do to avoid insider trading?
There are a few things you can do to avoid insider trading:
Be aware of the rules against insider trading.
Do not trade on material nonpublic information.
If you are unsure about whether or not information is material, err on the side of caution and do not trade.
Why is insider trading a problem?
Insider trading is a problem because it gives some investors an unfair advantage over others. Investors who trade on material nonpublic information are able to make profits that they would not be able to make if they did not have this information. This can distort the markets and make it difficult for investors to make informed decisions.
The SEC's action against Nikolaou is a reminder that insider trading is a serious offense.
https://www.sec.gov/news/press-release/2023-130?utm_medium=email&utm_source=govdelivery
