What Are the Rules of Investing?

What Are the Rules of Investing?

Viraaj Hedge, Author

The big bad wolf of Wall Street goes by the name of the SEC, or the Securities and Exchange Commission. This federal agency has been responsible for locking up more corrupt stock brokers than Rikers Island could ever hold. The government watchdog of shady market activity, the letters SEC are sure to make any Manhattan banker watch their step. 

The SEC obviously doesn’t play around. Here’s the breakdown of what will land you in hot water on Wall Street, or anywhere you trade. 

    1. Insider Trading – This is the biggest mistake you could make. Insider trading is trading stocks while having access to confidential materials or non-public information about a company. This information usually gives some sort of edge or advantage in trading. The maximum sentence for insider trading is 20 years in federal prison.  
    2. Market Manipulation – This one is a little more tricky. Market manipulation can be anything from misleading investors, to artificially raising or lowering the price of a stock with high-powered computers. There are hundreds of practices that fit under market manipulation, and all of them carry a heavy punishment. The maximum sentence for market manipulation is 5 years in federal prison. 
    3. Schemes – Ponzi investment schemes and pyramid schemes are serious crimes. Bernie Madoff ran the largest Ponzi scheme in history, making him worth around 64.8 billion dollars before he was arrested and imprisoned. 

Investing Club meets every other Monday right after school in room 349! Come to learn all about investing and participate in the stock market contest!