Simply put, insider trading rules exist to make the market fair by prohibiting people from profiting from information that has not been publicly dispersed. Despite the amount of attention that has been given to the federal prohibition of insider trading recently, California has its own statute that prohibits the activity. The state rules are clearly expressed in California Corporations Code Section 25402.
The state code differs in several ways from the federal rules in areas such as the types of people covered under the law, the level of materiality required, and available remedies. Specifically, California has a unique derivative type of remedy that can result in the issuer getting triple the amount of damages from a violator. A skilled San Francisco white collar criminal attorney can assist you if you have been accused of violating insider trading laws.
Under California's insider trading statute, five types of people can be guilty of insider trading: the issuer, officers, directors, controlling persons, and any other person whose relationship to the issuer gives that person access to substantive information not normally available to the public about the issuer. In most instances, the identity of the issuer will be clearly apparent. The term "issuer" is defined in the Corporations Code as, "any person who issues or proposes to issue any security...." Additionally, "person," as defined by the Code, includes both natural persons and incorporated/unincorporated organizations. If you need a San Francisco white collar criminal attorney, call Christopher Morales for a free consultation.