RE:CuriousCould be an insider, do they have information that is not public or they believe share price will rise? See what wiki says. Insider trading is the buying or selling of a company's securities by individuals who possess material, nonpublic information about that company. Insider tradingthe practice of buying or selling a company's securities based on material, nonpublic informationhas long been a contentious issue in financial markets. While the term often evokes images of corporate executives secretly profiting from inside knowledge, the reality is more complex. Some forms of insider transactions are perfectly legal, while others can result in severe criminal penalties. "The securities laws use 'insider' in different ways," said Marc Fagel, a lecturer at Stanford Law School and former U.S. Securities and Exchange Commission (SEC) regional director. "There are statutory insiders (officers, directors, 10% shareholders) who have certain legal duties, but 'insider' for insider trading purposes is much broader." KEY TAKEAWAYS Insider trading involves buying or selling a publicly traded company's stock based on nonpublic, material information about that company. Material, nonpublic information is any undisclosed information that could substantially impact an investor's decision to buy or sell a security. Illegal insider trading carries severe penalties, including potential fines, prison time, and other penalties. Insider transactions occur all the time and are legal when they conform to the rules set forth by the U.S. Securities and Exchange Commission (SEC). The SEC requires insiders to file reports of their trades, which are publicly available. This article explores what constitutes insider trading, when it crosses the line into illegal territory, and how regulators detect and prevent improper insider trading activities. By understanding the rules and regulations around insider trading, investors can better protect themselves and ensure they are operating within the bounds of the law. But it's also important to see why these rules are so crucial to the market in the first place. "Public trust is essential to the fair and efficient operation of our markets. But when public company insiders take advantage of their status for personal gain, the investing public loses confidence that the markets work fairly and for them," said Gurbir S. Grewal, director of the SEC's Division of Enforcement.