STUDY FOR THE SERIES 66 EXAM

We all know that insider trading is against the law, but it's worthwhile reviewing an actual case of insider trading to see how the SEC treats it, and also how it likely involves criminal charges brought by the Department of Justice (DOJ). Oh, and by the way, the Series 66 Exam includes questions on Insider Trading. How do I know this? I know it because NASAA's  Test Specifications for the Series 66  include Section IV (H) (4) (4.4) on Insider Trading. Here is a recent SEC Press Release dated February 22, 2024, on an Insider Trading case : " Spouse purchased stock using non-public information about planned merger " FOR IMMEDIATE RELEASE 2024-24 "Washington D.C., Feb. 22, 2024 — The Securities and Exchange Commission today charged Tyler Loudon of Houston, Texas, with insider trading ahead of a February 2023 announcement that London-based oil and gas company BP p.l.c. agreed to acquire TravelCenters of America Inc., a full-service truck stop and travel center compa...

For investment advisers reading this blog or for those who are planning to sit for the Series 66 Exam to become registered I.A. representatives, here is an interesting release from the SEC about Insider Trading by an investment adviser whom the SEC calls a "serial insider trader." SEC Charges Florida Investment Adviser a Second Time for Insider Trading Wellington resident agrees to pay a penalty equal to three times his unlawful profits to settle charges FOR IMMEDIATE RELEASE 2023-145 Washington D.C., Aug. 2, 2023 — The Securities and Exchange Commission today filed insider trading charges against Charles Rustin Holzer, a family office executive and former broker who last year settled SEC charges that he traded in options of Dun & Bradstreet Corp. (DNB) on inside information. The SEC’s latest complaint alleges that, in addition to the options trades that were the subject of the SEC’s prior lawsuit, Holzer also placed unlawful trades in DNB stock through offshore accounts ...

Over the years there have been some securities professionals whom the SEC has accused of illegally using inside information to make gains on trading stocks. Don't allow yourself to fall into this trap. It would ruin your career in the securities business, as well as subject you to fines, civil penalties, and even criminal convictions. NASAA specifies in its Test Specifications and Content Outline for the Series 66 exam that you should expect questions about  Trading on Inside Information . See NASAA's Series 66 Test Specifications, Section IV (H) (4). Bob Eder discusses  Trading on Inside Information  in detail in his  Study for the Series 66 Exam . Here is a sample of Bob Eder's treatment of using inside information: EXAMPLE Jason, a hedge fund manager, is managing several billions of client monies. He asks for and receives confidential information about XYZ Corp.’s forthcoming earnings from Bill, a friend, who happens to be on XYZ’s board. Bill tells Jason that XYZ...