Glossary
Insider Trading
Illegally trading on secret, non-public information
Insider trading is buying or selling shares using important information that has not been made public. It is illegal in most countries and carries criminal penalties.
The ban exists to keep markets fair. If those who know results or a takeover in advance can profit from it, everyone else loses structurally — and no one entrusts money to a market like that.
It covers more than employees: company lawyers, accountants, suppliers, even acquaintances who were told. Possessing the information is itself the problem.
Confusingly, some insider trading is legal. Executives buying or selling through a pre-declared procedure do nothing wrong, and those transactions are disclosed for anyone to see.
Those disclosures can even serve as research. Executives steadily buying their own company's shares with their own money reads as a positive signal — though selling has many innocent explanations, so interpret with care.