What is insider trading?

Insider trading is buying or selling a publicly traded company's stock by someone with non-public, material information about that company. Non-public, material information is any information that could substantially impact an investor's decision to buy or sell a security that has not been made available to the public.

When is insider trading illegal?

Insider trading is deemed illegal when the material information is still non-public and comes with harsh consequences, including potential fines and jail time. Material non-public information is defined as any information that could substantially impact that company's stock price. When Is Insider Trading Legal?

Can an insider trade during a trading window?

In some cases, the insider may have to refrain from trading (often until the non-public information becomes public) and can trade during a specific trading window in the future. Who counts as an "insider"?

What is the misappropriation theory of insider trading?

A newer view of insider trading, the misappropriation theory, is now accepted in U.S. law. It states that anyone who misappropriates material non-public information and trades on that information in any stock may be guilty of insider trading.