When it comes to the stock market, there are certain legalities and guidelines that must be followed to ensure proper ethics. If these ethics are breached, it could lead to negating a sale, or worse, legal ramifications.
Selling shares to someone you know or consider a friend is considered against the rules. There are several reasons for this, which we’ll outline in the following article.
Sell Shares to a Friend: Why It’s Not Acceptable
Before you sell shares to a friend, you should think again before you pull the trigger. Completing this transaction could land you in a lot of hot water.
You’re not allowed to sell shares to anyone you know or consider a friend or any family member. This is considered a conflict of interest and is against the rules of trading.
However, there are certain ways around this rule if you wish to transfer a stock you own to someone close to you. You just have to word the transaction in the correct manner.
Although you’re not technically allowed to sell shares to a friend or family member, this doesn’t mean that shares you own can’t be transferred into their possession. You just need to take the right steps leading up to the transfer.
Legally, you can gift shares or stocks to someone you consider a friend or family member. Gifting is defined as the transfer of any share or stock without a monetary value attached to it.
These transactions are conducted using what is known as ‘off the market’ transfer rules. This means that there was no official sale attached to them.
It’s important that you never sell shares to anyone you consider a friend. However, gifting is completely legal and won’t land you in any trouble.
There are unique rules surrounding many types of transactions on the stock market. If you’re ever unsure if something is legal or ethical, contact your local stock expert to receive information regarding laws and regulations. Taking the extra few minutes to ensure you aren’t breaking any rules when you sell shares will benefit you in the long run!
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