Insider Trading

Doc's CJ Glossary by Adam J. McKee
Course: Criminal Law

In criminal law, insider trading refers to using non-public, confidential information to trade securities such as stocks, bonds, or options. Insider trading can occur when an individual who has access to privileged information about a company or industry, such as a company executive or board member, uses that information to make trades in securities based on that information.

Insider trading can also occur when an individual obtains non-public information about a company from a source, such as a friend or family member who works for the company, and then uses that information to trade securities. This is often referred to as “tipper-tippee” insider trading.

Insider trading is illegal because it violates securities laws, regulations, and ethical standards for business and investment practices. It can also lead to market manipulation, harming investors and the financial system’s integrity. Individuals who engage in insider trading can face criminal charges and penalties, including fines, imprisonment, and forfeiture of any profits or gains obtained through illegal trading. Companies and other organizations can also face civil and criminal liability for insider trading their employees or agents conduct.


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Last Modified: 03/09/2023


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