Illegal use of insider information, or insider trading, is a serious financial crime involving trading securities based on non-public, confidential information. This action violates the principle of equal opportunity in the market and gives an unfair advantage to the holder of the information. In Georgia, where corporate governance standards are becoming increasingly strict, facts of insider trading are coming under strict monitoring. Allegations may concern company directors, employees, auditors, or related persons who used internal information for personal enrichment. Such accusations often lead not only to criminal prosecution but also to the end of a professional career and severe reputational damage. Effective defense requires proving that the trading decision was based on public sources or was part of a pre-written trading plan.
What does Insider Trading Defense service cover?
Lawyers working on this category of cases offer clients specialized legal assistance, which includes:
- Analysis of information status: Determining whether the information used was actually confidential and not publicly available from other sources.
- Checking the "Insiders List": Studying the company's list of insiders and information distribution channels to determine whether the accused had access to specific information.
- Justification of trading strategy: Presenting evidence that the transaction was carried out according to a pre-existing plan or algorithm and did not depend on internal information.
- Representation in investigation: Interaction with the Prosecutor's Office and the regulator, giving testimony, and presenting evidence.
- Internal investigation: Conducting an internal investigation for corporate clients to establish facts and manage risks.
Common Situations and Scenarios
Charges of insider trading are often related to the following circumstances:
- Buying shares before a merger: Purchasing shares a few days before an official announcement about a company merger or acquisition.
- Selling shares before a bad report: Massive sale of shares before the publication of quarterly financial statements when poor results are expected.
- "Tipping": Providing confidential information ("tip") to friends or family members so that they can trade on this information.
- Employee stock options: Realization of options at a time that suspiciously coincides with significant events for the company.
Georgian Legislation and Legal Framework
Insider trading is regulated by the Law of Georgia on the Securities Market and the Criminal Code of Georgia (Article 202). The law prohibits an insider from entering into a transaction on securities using insider information, as well as transferring this information to a third party. Insider information is defined as precise information that is not public and whose disclosure would have a significant impact on the price of the security. Criminal liability arises if the action caused a large amount of damage or income. The lawyer's strategy is often based on defending the "materiality" (significance) of the information or its "public nature."
Service Delivery Process
Defense begins with a detailed study of the facts: when the transaction took place, what information the person possessed at that moment, and when the information became public. The lawyer works with financial analysts to prove that the trading decision was logical even based on publicly available information. Throughout the process, active communication with investigative bodies takes place to avoid misinterpretations. The goal is to terminate the case at the investigation stage or obtain an acquittal in court.
Why choose a specialist on Legal.ge?
Insider trading cases require highly qualified lawyers who understand corporate law and financial markets. Legal.ge gives you access to such experts. Lawyers on our platform have experience in complex financial investigations and can effectively protect your interests. Incorrect defense can destroy your reputation and career. Choose a trusted professional on Legal.ge.
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