Can a Corporate Officer Sell Stock if He Knows the Company Will be Dissolved?
Full Question:
Answer:
The answer depends on al lthe circumstances involved, such as whether there was a breach of fiduciary duty, whether the stock was sold under a pre-existing plan, contract, or instruction that was made in good faith, etc. When corporate insiders trade in their own securities, they must report their trades to the authorities. Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.
Insider trading is commonly referred to as the use of confidential information about a business gained through employment in a company or a stock brokerage, to buy and/or sell stocks and bonds based on the private knowledge that the value will go up or down. It is a crime under the Securities and Exchange Act. However, the term actually includes both legal and illegal conduct. The legal version is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC.
For further discussion, please see:
http://www.sec.gov/answers/insider.htm
http://www.law.uc.edu/CCL/34ActRls/rule10b5-1.html
http://www.law.uc.edu/CCL/34Act/sec16.html
http://www.seclaw.com/docs/insidertrading033104.htm
