Insider trading in securities may occur when a person in possession of material
nonpublic information about a company trades in the company’s securities and makes a
profit or avoids a loss. The Securities Exchange Act of 1934 and the Insider Trading
Sanctions Act of 1984 have provisions which forbid insider trading. One provision of
the 1934 Act requires the disgorgement of short-swing profits by named insiders. The
1934 Act’s general antifraud provision has been used many times to sanction insider
trading. In addition, in 1984 Congress enacted legislation imposing up to treble damages
upon one who engages in insider trading.