The U.S. Department of Justice just charged 30 individuals in a global insider trading scheme that netted tens of millions in illegal profits. If you've ever wondered how these schemes actually work—and how to spot the red flags—this case is a master class in what not to do.

According to the DOJ announcement, the ring operated across multiple countries, with traders using non-public information to make trades ahead of major corporate events like mergers, earnings announcements, and restructurings.

Here's how insider trading schemes typically work, and this case is textbook:

Step 1: The Leak Someone with access to material non-public information—think investment bankers, lawyers, executives, or even their assistants—shares details about upcoming deals or earnings. Sometimes it's intentional. Sometimes it's loose lips at a bar. Either way, the information starts flowing.

Step 2: The Network That information gets passed through a network of friends, family, or associates who place trades. The further removed you are from the original source, the harder it is to trace. In this case, 30 people means a lot of degrees of separation.

Step 3: The Profits Traders buy stock (or options, which amplify gains) before the news breaks, then sell immediately after for quick profits. Rinse and repeat across dozens of trades, and the money piles up fast.

Step 4: The Pattern Here's where they get caught. Regulators have algorithms that flag suspicious trading patterns—big positions right before major news, accounts that consistently profit from inside information, unusual coordination between seemingly unrelated traders. Once the pattern emerges, investigators start pulling phone records, emails, and bank statements.

The DOJ hasn't released all the details yet, but "tens of millions in illicit profits" suggests this wasn't small-time. We're talking about organized, repeated trades over an extended period.

Red flags for retail investors:

If you're on the receiving end of a "tip," here's how to know you're walking into trouble:

• The source works at the company (or knows someone who does). If they have access to non-public info, any trade you make based on that is illegal.

• The tip is about a specific upcoming event—merger, acquisition, earnings surprise. General opinions about a company are fine. Specific, non-public facts are not.

• They tell you to keep it quiet. If someone says "don't tell anyone where you heard this," that's your cue to walk away.

• They suggest buying short-dated options. Options amplify gains, which is why insider traders love them. It's also why they're the first thing regulators look at.

• It's too good to be true. If someone is handing you a guaranteed way to make money, ask yourself why they're sharing it.

So what does this mean for you? Don't trade on tips unless you can verify the information is public. If you're not sure, don't trade. The DOJ doesn't care if you didn't know it was insider trading—they care whether you profited from non-public information.

And if you think you're small enough to fly under the radar, think again. These cases start with pattern recognition. You don't need to be a hedge fund manager to get caught.