Knowing The Ins And Outs Of Stock Trading Compliance Guidelines
Stock trading compliance guidelines, as we will examine them here, apply to corporate executives and how they trade the stock of the company they work for, and IT compliance involving computers .These stock trading compliance guidelines are usually created to comply with laws and regulations, increase owner commitment, and add value to the stock for the shareholders.
Target Ownership Levels
These levels are established within a company to insure all of the corporate executives are always working for the best interests of the company and are committed, at all times, to increasing the value of the stock. This is usually accomplished by setting a minimum percentage of stock that each executive must hold while working for the company. Stock trading compliance guidelines are a policy of the company to oppose the unauthorized disclosure of any nonpublic information acquired in the workplace and the misuse of material nonpublic information in securities trading.
Governance
Good governance is the key to compliance. Compliance is a much broader issue than just involving stock trading compliance guidelines. It also involves meeting legal requirements imposed by regulatory bodies. The full picture is framed by proven best practices and governance polices that allow a company to proactively reduce security threats and thereby comply with the laws, standards, and frameworks that apply to their business. The first step for the compliance officer is to understand and define the company's stock trading compliance guideline landscape and IT policy. He then needs to create a plan to achieve and sustain compliance then implement it. Audits and reports on compliance should then follow.
Insiders
Stock trading compliance guidelines within a company usually apply to all the company's securities; common stock, options for common stock, preferred stock, warrants, and convertible debentures. Potential insiders are defined as all officers of the company, all members of the board of directors, and all employees of, and consultants and contractors to the company and its subsidiaries who receive or have access to "material nonpublic information" regarding the company. This group also includes immediate family members, plus any person who possesses "material nonpublic information" regarding the company.
Criminal and Civil Penalties
Being an insider and violating stock trading compliance guidelines within your company could subject you to penalties of up to $1,000,000 and ten years in jail. Employees that violate these guidelines may also be declared ineligible to participate in the company's equity plan and/or be fired.
