You enter the school spelling bee. And so does your older brother Sam, who's the top-notch linguist in the country. Should you be treated the same? Not fair, is it?
It works the same with securities. When it comes to trading, buying, or selling stocks and other securities, people working inside a company have a leg up when it comes to knowledge of their own company's performance. Why? Because they have special insider information. These people—including C-level officers and board members—are considered affiliated persons, and they have to follow a bunch of extra laws. If these types own more than 10% of their own company's securities, they're considered affiliated investors, and they face even more restrictions.
It all helps level the playing field between insiders and you, the average Joe or Jane investor. Fair? Definitely.
Related or Semi-related Video
Finance: What is an Associated Person?3 Views
Finance a la shmoop... what is an associated person oh it sounds so
devious maybe even evil associated person a crime scene like were they [Man with horns on his head in a street]
there when the murder happened or were they just hanging out at seedy billiards
club shoes optional....Picture a bright light
shining in your face and a dark voice asking are you now or have you ever been
associated with an associated person yeah not so much [Light shining on a man]
all right an associated person is just a principal in a FINRA covered firm... FINRA,
FINRA it stands for Financial Industry Regulatory Authority and the Associated
person is then legally "associated" with that firm and they have to [Man holding arms up to police]
follow that firms standards and practices ethical codes and style guides
in not using pink color font on their letterhead so who is that person
it's a partner, an officer, a director, or a branch manager or even anyone
performing duties similar to the above that is it's a broad all-encompassing
definition of associated so that if friends of or dotted line partners to
the firm do bad things well then the long arm of the law has the right to go [Police officers chase man with horns on head]
after them with teeth well the first type of whispery associated person would
have been a lot more compelling sorry
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