The buying or selling of a security by a person who has
access to material, nonpublic information about the security or company. Insider
trading is illegal.Trading by corporate insiders such as officers, key
employees, directors, and large shareholders may be legal, if this trading is
done in a way that does not take advantage of non-public information.
Insider trading is legal once the material information has
been made public, at which time the insider has no direct advantage over other
investors.
However, the term is frequently used to refer to a practice
in which an insider or a related party trades based on material non-public
information obtained during the performance of the insider's duties at the
corporation, or otherwise in breach of a fiduciary or other relationship of
trust and confidence or where the non-public information was misappropriated
from the company.
