Editing Insider trading (section)

====Statutory====
U.S. insider trading prohibitions are based on English and American common law prohibitions against fraud. In 1909, well before the Securities Exchange Act was passed, the [[United States Supreme Court]] ruled that a corporate director who bought that company's stock when he knew the stock's price was about to increase committed fraud by buying but not disclosing his inside information.

Section 15 of the [[Securities Act of 1933]]<ref>{{cite web |url=https://www.sec.gov/about/laws/sa33.pdf |title=Securities Exchange Act of 1933 |access-date=December 21, 2011 |archive-date=January 11, 2012 |archive-url=https://web.archive.org/web/20120111084531/http://www.sec.gov/about/laws/sa33.pdf |url-status=live }}</ref> contained prohibitions of fraud in the sale of securities, later greatly strengthened by the [[Securities Exchange Act of 1934]].<ref>{{cite web |url=https://www.sec.gov/about/laws/sea34.pdf |title=Securities Exchange Act of 1934 |access-date=December 21, 2011 |archive-date=January 14, 2012 |archive-url=https://web.archive.org/web/20120114052905/http://www.sec.gov/about/laws/sea34.pdf |url-status=live }}</ref>

Section 16(b) of the Securities Exchange Act of 1934 prohibits short-swing profits (from any purchases and sales within any six-month period) made by corporate directors, officers, or stockholders owning more than 10% of a firm's shares. Under Section 10(b) of the 1934 Act, [[SEC Rule 10b-5]], prohibits fraud related to securities trading.

The Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988 place penalties for illegal insider trading as high as three times the amount of profit gained or loss avoided from illegal trading.<ref>{{cite web|author=Thomsen LT|url=https://www.sec.gov/news/testimony/2006/ts092606lct.htm|title=Testimony Concerning Insider Trading|publisher=SEC|access-date=December 21, 2011|archive-date=September 21, 2018|archive-url=https://web.archive.org/web/20180921022213/https://www.sec.gov/news/testimony/2006/ts092606lct.htm|url-status=live}}</ref>