Insider Trading: Definition and Examples | MSN Watch
Insider trading is when someone with secret, important information about a company uses that info to buy or sell that company’s stock. This is illegal because it gives those insiders an unfair advantage over regular investors. It’s considered a form of cheating in the stock market.
One recent high-profile case of insider trading involved the former CEO of a major technology company. He was found guilty of using confidential information to make profitable trades in his company’s stock. This kind of behavior is not only illegal but also unethical, as it undermines the integrity of the financial markets.
Insider trading is closely monitored and regulated by government agencies like the Securities and Exchange Commission (SEC). They work to investigate and prosecute those who engage in insider trading to ensure a level playing field for all investors.
To prevent insider trading, companies often have strict policies in place to limit the flow of confidential information and restrict trading by insiders. They also require insiders to report their trades to the SEC to ensure transparency in the market.
Overall, insider trading is a serious offense that can have far-reaching consequences for both individuals and the financial markets as a whole. It’s important for investors to be aware of the laws and regulations surrounding insider trading to protect their investments and the integrity of the stock market.
