Insider trading

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The buying or selling of a security in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, non-public information about the security.

In the United States, the SEC uses the term “insider” to identify individuals—corporate officers, directors, employees, and certain professional advisors—who have access to material financial and operational information about a company that has not yet been made public. Insiders are restricted in their ability to engage in transactions involving company securities (both purchases and sales) and may trade only when they are not in possession of material nonpublic information. Trades made on the basis of such information are considered “illegal insider trading” and, under various acts passed by Congress, are punishable with jail time and financial penalties (up to three times the profit gained or loss avoided from such activity).

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US SEC: Insider Trading