Securities Fraud & Insider Trading: Definition, Regulations & Penalty


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question 1 of 3

Freddie just read an article in the financial section of a local paper that stated XYZ Company is in big trouble for faking lab results for a new medication. He decides to call his broker to request that his stock be sold immediately. Freddie is:

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1. What is the most severe criminal penalty for insider trading?

2. Kenneth was walking past a closed office door when he heard a top company executive yell, 'Sell my company stock before the whole thing goes under.' Kenneth became worried enough that he advised other employees to immediately join him in selling their shares. Did he do anything wrong?

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About This Quiz & Worksheet

This quiz/worksheet combo helps you assess your knowledge of insider trading and securities fraud. In order to pass the quiz, you will need to know what insider trading is and the criminal penalty for this type of trading.

Quiz & Worksheet Goals

Use this quiz and worksheet combo to review:

  • Criminal charges for insider trading
  • Definition of disgorged
  • Examples of possible insider trading

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the related busines law lesson
  • Defining key concepts - ensure that you can accurately define main phrases, such as disgorged
  • Knowledge application - use your knowledge to answer questions about the consequences of insider trading

Additional Learning

If you are interested in learning more on this subject, review the accompanying lesson titled Securities Fraud & Insider Trading: Definition, Regulations & Penalty. This lesson will help you:

  • Define insider trading and tipping
  • Learn about the consequences of partaking in insider trading
  • Identify what the Securities Act of 1933 Section 10 (b)(5) addressed
  • Review examples of securities fraud