insider trading


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Insider trading

Trading by officers, directors, major stockholders, or others who hold private inside information allowing them to benefit from buying or selling stock.

Insider Trading

A trade one makes because one has relevant information on a company that has not been released to the public. For example, a person may have access to a company's financial state prior to its official announcement, and then buy or sell that company's stock accordingly. Generally speaking, those who engage in insider trading are a company's board of directors, executives, major shareholders, and other investors who have access to non-public information. Insider trading is a serious crime when it is done without proper authorization.

insider trading

The illegal buying or selling of securities on the basis of information that is generally unavailable to the public. An example is the purchase by a director of shares of his or her firm's stock just before the release of surprisingly good earnings information.
Case Study In November 2001 the Securities and Exchange Commission charged 15 individuals with insider trading in the shares of Nvidia Corporation, a California maker of graphics chips. According to the SEC, in March 2000 Nvidia's president used e-mail to inform employees the firm had won a major contract to supply chips for Microsoft Corporation's new Xbox video game system. News of the contract was not announced to the public until five days following the employee e-mail. The time lag allowed the 15 individuals—11 employees plus 4 people tipped by the employees—to profit by purchasing Nvidia shares prior to the public announcement of the contract. The case was relatively unusual in that the individuals charged with insider trading were low-level employees rather than high-level executives.

Insider trading.

If managers of a publicly held company, members of its board of directors, or anyone who holds more than 10% of the company trades its shares, it's considered insider trading.

This type of trading is perfectly legal, provided it's based on information available to the public.

It's only illegal if the decision is based on knowledge of corporate developments, such as executive changes, earnings reports, or acquisitions or takeovers that haven't yet been made public.

It is also illegal for people who are not part of the company, but who gain access to private corporate information, to trade the company's stock based on this inside information. The list includes lawyers, investment bankers, journalists, or relatives of company officials.

insider dealing

or

insider trading

transactions in FINANCIAL SECURITIES by persons having access to privileged (secret and confidential) information not yet available to the general investing public, and who in consequence stand to profit from exploiting this knowledge. For example, an employee of a merchant bank engaged in working out the financial details of a prospective TAKEOVER BID by a client firm for another company, might himself or through intermediaries buy shares in the target company prior to the public announcement of the bid.

In the UK, the provisions relating to the criminal offence of insider dealing are now contained in Part V of the Criminal Justice Act 1993 which replaced the Company Securities (Insider Dealings) Act 1985. In addition, the directors and the company will be bound by the Stock Exchange Model Code. See STOCK MARKET.

insider trading

any transactions in securities such as STOCKS and SHARES by persons having access to privileged (confidential) information not as yet available to the general investing public, and who in consequence stand to gain financially from this knowledge. For example, a person who is employed by a merchant bank and is involved in working out details of a prospective TAKEOVER by a client firm of another firm may himself or through other people arrange to purchase shares in the target firm prior to the public announcement of the takeover. See CITY CODE.
References in periodicals archive ?
Manne, Insider Trading and the Stock Market (The Free Press, 1966); Andrew Metrick, "Insider Trading," in The New Palgrave Dictionary of Economics, 2nd ed.
After all, as Manne argued, economists seem better equipped than others to analyze this issue, which receives a lot of attention from government officials, and is regularly the object of media attention every time a new major insider trading case arises.
Unlike the US Congress that did not pass a law outlawing insider trading and, as such, the government had to build insider trading cases based on general provisions of US securities laws, our Congress saw it fit to include in our Securities Regulation Code (SRC) provisions that prohibit insider trading (Section 27.
61) The Government insisted that "Newman and Chiasson were criminally liable for insider trading because, as sophisticated traders, they must have known that information was disclosed by insiders in breach of a fiduciary duty, and not for any legitimate corporate purpose.
From core compliance to personal trading and insider trading, each BasisCode software solution is available as a stand-alone product or offered as part of an integrated package.
A problem with the new rules on insider trading is that they could increase speculation in the market.
Holwell is very familiar with insider trading cases, having presided over the insider trading trial of Galleon Group founder Raj Rajaratnam.
The purpose of this Article is threefold: (1) to demonstrate that insiders have an incentive to (and do in fact) exploit the relatively lax trade-disclosure rules applicable to firms to enrich themselves via indirect insider trading; (2) to describe the costs of such indirect insider trading to public shareholders; and (3) to put forward a proposal that, I show, would substantially diminish insiders' ability to engage in indirect insider trading and reduce the resulting costs to public investors: subject firms to the same two-day disclosure rule applied to their insiders.
Insider trading is buying/selling of a security by someone with access to material, non-public information that has the potential to affect its price.
THE Securities and Exchange Board of India ( Sebi) is likely to get access to call records from telecom operators of persons suspected to be involved in insider trading and other similar offences related to stock markets.
Insider trading refers to dealing in shares by persons who have access to corporate non-public information affecting the value of the shares.
8 million against billionaire hedge fund manager Raj Rajaratnam for widespread insider trading.