Insider trading refers to a crime committed when an individual, in possession of confidential information not accessible to the public, exploits that information to execute trades in financial instruments. This behavior involves not only buying and selling securities, but also sharing or suggesting to others how to act, thereby influencing the market in an illicit way.
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Who can be considered an insider
An individual becomes an insider when he or she obtains inside information as a result of his or her role or position in a company. This insider information may be acquired, for example, if a person is on the board of directors, holds shares in the company, or has control, direction, or management roles. Such information, also called price sensitive, concerns specific, non-public details about financial instruments or their issuers. If disclosed, this information could significantly affect the price of associated financial instruments.
Regulations and penalties for insider trading
Insider trading or insider abuse is considered a serious crime both in Italy and in the European context. Legislative Decree No. 58 of Feb. 24, 1998, known as the Consolidated Law on Financial Intermediation (TUF), and the subsequent Law No. 62 of 2005, which transposes European Directive 2003/6/EC on market abuse, establish the relevant regulations. Anyone who uses inside information to take advantage of it, to the detriment of market integrity, is subject to penalties ranging from 3 to 8 years’ imprisonment and fines ranging from €200,000 to €3,000,000.
CONSOB’s role in market supervision
In Italy, CONSOB (Commissione Nazionale per le Società e la Borsa) plays a key role in monitoring and preventing insider trading. This body oversees market operations to protect the fairness and transparency of financial transactions, ensuring that investors can operate in a safe and reliable environment. Through this monitoring activity, CONSOB helps prevent and sanction misconduct such as insider trading, thereby maintaining confidence in financial markets.
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Giuseppe Fontana
I am a graduate in Sport and Sports Management and passionate about programming, finance and personal productivity, areas that I consider essential for anyone who wants to grow and improve. In my work I am involved in web marketing and e-commerce management, where I put to the test every day the skills I have developed over the years.
