Insider trading trap !

Interesting case in the courts this week that would send a shiver of fear down the spine of many investors.

A guy with a few shares in a seafood business had a friend who was an employee of that firm - and he commented that his employer was " on the skids " financially - and that it was common knowledge that the bank was about to call in their loan.

Quite reasonably the owner of shares rushed to his stockbroker and ordered him to sell the stock - confiding what his friend had told him.

The stockbroker did what he was told - and then informed the people who oversee the share business of this conversation - and the guy with the shares was arrested - and charged with insider training. He was convicted - fined $ 20,000 and put on a twelve months good behaviour bond.

Most people think that insider trading is where a person in high office gets privileged information - and acts on it to their advantage.

Wrong ! Even scuttlebutt from a friend can be interpretted to bring you into conflict with the law - and in this case his error was to disclose the reason for the sell order to his stockbroker.

A wise reason to choose your stockbroker carefully - and keep your mouth shut at all times !