What is insider trading? Thanks.?

Question

What is insider trading? Thanks.?

Answer 1

When someone inside the company , an executive, an attorney, thier wives, are privy to information before it becomes public knowledge and they use that information to buy or sell a stock because they think that information will effect the publics buying or selling of the stock , that is inside trading and illegal.

It is an unfair advantage.

It is against the law, ask Martha Stewart about it.

Answer 2

Insider trading is when someone buys/sells a security that is based on information that is not available to the general public.

You do not have to be an employee, shareholder or an officer of the firm.  You can be totally an outsider but if you use information that only specific individuals of the company are aware you could be in violation of insider trading if you act on such information.

Answer 3

Any trading done by someone who has access to info abt a company that is not made public.

Typically the insider is an officer of a company, but word gets around, and the stock broker of an insider can reveal info to other clients.

Martha Steward was accused of such--of being privy to info provided by her stockbroker. (She was found innocent of the charges.)

Answer 4

it is theknowledge of an event that is going to happen to a comany that is publicly traded and the information has not been given to the press and some one eithers buys or sells stock to gain an unfair advantage to the rest of the public.

Answer 5

It's when you buy or sell shares in a company after getting information that only peple who work in that company would know. The reason this is bad is that you should only trade stocks based on publically available information on companies.

Answer 6

When the owner of the company tells his brother to sell his stock today because the company is closing tomorrow.  .

Answer 7

Dealing in shares when you have been made an insider. For example if you are legitamately told  there is going to be a placing in a certain share and are made an insider, you cannot deal in that stock.

You may receive inside information from a third party. That is information that is not in the public domain and would have an effect on the shareprice if known. If you deal with this knowldege you could be committing a criminal offence or at least market abuse.

An example recently was an IT man who had access to the confidential E-mails of certain executives of Bodyshop and he obtained details of their Christmas trading which would underperform expectatuions.

He borrowed £29000 (more than his annual salary) to short 80,000 Bodyshop shares through a CFD, making £38472

He was fined £85000 for market abuse.

Market abuse is the route usually taken by the FSA probably because they (the FSA) need the money. If they went the route of insider dealing which is harder to prove the case would go to the DTI and the criminal courts. Once the FSA make the ruling there is no appeal, that's final.

Answer 8

It is when people (typically inside a company management team), use non public company information to buy or sell shares. For example, an executive might know that the financial report for the year is going to have a significant loss showing. He then sells his shares before this information is released to the general public because he knows that when it becomes public the share price will fall sharply. he makes money before the share prices fall. A lot of people have gone to jail for this as it is completely illegal.