What is insider information?

Insider information refers to non-public facts about a publicly-traded company which could provide an advantage to investors. The manipulation of insider information to benefit an investor in buying or selling stock is known as insider trading and is illegal. The Securities and Exchange Commission regulates legal insider trading.

What is insider trading?

Insider trading goes hand-in-hand with insider information and is the practice of using non-public information to execute trades. For example: The chair of the board knows that a merger is about to be announced that would substantially increase the share price of the company.

What information does an insider know about a company?

For example, an insider may know about a new product feature that is known to the public. However, this information may be unlikely to influence the stock price. Non-public information about a company that is known to the stakeholders of a firm and potentially communicated to third parties.