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Insider Trading: A Look at Facts and Myths

When it comes to the stock market and insider stock trading, there are some important facts that any person interested in stock investing should bear in mind. Additionally, there are a significant number of myths that deserve debunking..

Over the course of the past four or five years, the whole concept of insider stock trading has gained a significant amount of attention thanks to the plight of American Domestic Diva: Martha Stewart - which brings us to our first myth about insider stock trading.

When the Martha Stewart case is mentioned, most people automatically believe that she was convicted of and sent to prison for insider stock trading. That simply is not the case. Why a grand jury initially indicted Ms. Stewart on such a charge is because the judge through the charge out due to insufficient evidence. In short, Ms. Stewart never was found guilty of insider trading.

One important fact to keep in mind about insider trading in the United States and many other countries in the 21st century is that intent is no longer an element of the crime. Previously and historically you had to intend to misuse insider information in order to gain a benefit through the stock market. In today’s world, you merely have to make a stock trading or stock investing decision based on insider information that is in your possession whether you intended to misuse the information in violation of the law or not.

The most interesting myth associated with an insider trading case involves a fellow named Andrew Carlssin. Mr. Carlssin was charged by the United States government with insider trading in the past couple of years. The true part of the story is that with an investment of only $800, Mr. Carlssin invested in the stock market and ended up making millions of dollars in a very short period of time.

Mr. Carlssin was arrested. In his defense, Mr. Carlssin is asserting that he traveled back in time from 200 years in the future to buy and sell stocks -- armed with the knowledge of how certain stocks performed at certain times. "It was just too tempting to resist," Mr. Carlssin stated in a videotaped confession.

Prosecutors, naturally believe Mr. Carlssin's contention to be bogus, writing him off as a "nut." But, he did make $350 million U.S. And, interestingly, there is no record of Mr. Carlssin existing anywhere before December 2002, when he made his first stock trade.

Fact or myth? Man from the future? Take a guess!