The Insider Trading Advisor helps individuals who regularly deal with insider information to evaluate their share purchase decisions against the internal guidelines on insider trading. Companies and institutions often have internal guidelines which reflect the laws on insider trading. The tool converts complex guidelines on insider trading into actionable suggestions on whether individuals can buy certain stocks. A dashboard monitors and visualizes key information such as the identity of the person who used the application, the result of the assessment and the purchase of stocks by employees which were carried out after a positive assessment was given.
Under various EU and national laws, insider trading and misuse of insider information is punishable and may entail hefty pecuniary sanctions as high as EUR 15 million in the EU. Companies therefore enforce strict internal policies relating to the monitoring and notification of potential insider trading which employees must adhere to before purchasing stocks. These internal trading guidelines set out the framework for employees to mitigate the risk of insider trading and navigating through these complex rules to ensure a correct assessment can become difficult.
The Insider Trading Advisor transforms complex internal policies on insider trading into a digital self-serve solution that allows business users to receive instant feedback on their queries. The tool collects inputs from the user to determine the risk of insider trading by evaluating any department-specific competitive concerns in relation to the desired purchase. The employee is guided through an interactive questionnaire, based on which all necessary information is gathered. This input is then used to clearly instruct the employee to go ahead with or refrain from a stock purchase. If special circumstances require it or no clear assessment can be made, the matter is escalated to the compliance department who is asked to approve a certain purchase via email. The user’s inputs, results, subsequent stock purchases and details thereof are documented to track compliant behavior.
How it works
An interactive questionnaire collects and processes all relevant stock purchase data. Based on this information, the tool then assesses the envisaged purchase against all applicable internal policies.
The employee receives an actionable result whether the purchase can be taken forwarded or is prohibited. A report summarizing the employee’s inputs, the result of the assessment and the reason is automatically sent to them via email.
In cases where no clear assessment can be made, the tool automatically escalates the matter to the responsible compliance department who is able to approve or reject the purchase over email. Via a dashboard, the compliance department can keep track of potential risks, employees’ names, stock details and assessment results.