Insider
What Does Insider Mean?
Any person who has knowledge of, or access to, valuable nonpublic information about a corporation.
Investopedia explains Insider
Examples of an insider include the directors and officers of a company. Stockholders who own more than 10% of equity in a company are also insiders.
Insider Trading
What Does Insider Trading Mean?
The buying or selling of a security by someone who has access to material, nonpublic information about the security.
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Investopedia explains Insider Trading
Insider trading can be illegal or legal depending on when the insider makes the trade: it is illegal when the material information is still nonpublic--trading while having special knowledge is unfair to other investors who don't have access to such knowledge. Illegal insider trading therefore includes tipping others when you have any sort of nonpublic information. Directors are not the only ones who have the potential to be convicted of insider trading. People such as brokers and even family members can be guilty.
Insider trading is legal once the material information has been made public, at which time the insider has no direct advantage over other investors. The SEC, however, still requires all insiders to report all their transactions. So, as insiders have an insight into the workings of their company, it may be wise for an investor to look at these reports to see how insiders are legally trading their stock.
Insider Information
What Does Insider Information Mean?
Material information about a company's activities that has not been disclosed to the public.
Investopedia explains Insider Information
It is illegal for anyone with access to insider information to make trades based on it.