Insider Trading

Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company. The term is frequently used to refer to an illegal practice of buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Illegal insider trading is believed to raise the cost of capital for securities issuers, thus decreasing overall economic growth.

In the United States and several other jurisdictions, trading conducted by corporate officers, key employees, directors, or significant shareholders must be reported to the regulator or publicly disclosed, usually within a few business days of the trade. Many investors follow the summaries of these insider trades in the hope that mimicking these trades will be profitable.