Insider Trading

Insider trading refers to the buying or selling of publicly-traded securities based on non-public, material information about the company. This practice is considered illegal and unethical because it undermines investor confidence and the integrity of the financial markets. Material information is any data that could influence an investor's decision to buy or sell a stock, such as earnings reports, mergers, or significant company developments. Individuals who engage in insider trading typically include company executives, employees, or any party with privileged access to sensitive information. Regulatory bodies, such as the Securities and Exchange Commission (SEC) in the United States, monitor trading activities and enforce laws against insider trading to promote fair trading practices and protect investors. Violation of insider trading laws can lead to severe penalties, including fines and imprisonment.