Insider Trading

2014-10-13

During the 112th Congress, policy makers conducted oversight of the Securities and Exchange Commission (SEC) and the Commission’s efforts to protect investors and maintain fair, orderly, and efficient markets.  As investors, MFA members want to invest in honest and transparent capital markets.

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.

Like other investors, private fund managers, are subject to extensive rules governing trading activities that involve securities. Such rules include, for example, prohibitions on insider trading, restrictions on short selling, disclosure requirements, and limitations on the purchase and sale of unregistered securities.

In addition, private fund managers are subject to SEC regulation as investment advisers under the Advisers Act, which applies significant disclosure and compliance requirements, including requiring a private fund manager to adopt and implement a written code of ethics that is designed to prevent insider trading and sets standards of conduct for employees reflecting the adviser’s fiduciary obligations to its clients.

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