Definitions #
Buying or selling a company's stock based on private, non-public information about that company, which is usually illegal.
Technical The trading of publicly-traded securities by persons aware of material, non-public information, in breach of a duty of trust or confidence, prohibited under securities laws (e.g., SEC Rule 10b-5).
Example The executive was charged with insider trading for selling shares before a negative clinical trial result was made public.
Etymology #
Insider (from within, specifically one who has private access) + trading (the act of buying and selling). The term became prominent in US law in the 1930s with the Securities Exchange Act.
Collocations #
- illegal insider trading 非法内幕交易，违反证券法
- material non-public information 重大非公开信息
- tipper/tippee liability 泄露信息者和接受信息者的责任
Real Business Examples #
- The SEC filed a suit claiming that the CFO's sale of shares was based on material non-public information, constituting insider trading.
- To avoid insider trading, the compliance team restricted trading during the blackout period before quarterly earnings.
Register & Variants #
- Register: formal
- BrE/AmE: 美式常用 insider trading；英式亦用 insider dealing
Synonyms & Antonyms #
- Synonyms: insider dealing
- Antonyms: arm's length trading
Common Errors #
- Thinking only primary insiders can be liable Even tippees (those who receive the information) can be liable if they trade on it.
- Assuming insider trading is only about stocks It applies to other securities like options, bonds, and swaps.
Confusable Terms #
- Insider Trading vs. Insider Dealing vs Insider Trading
- In British English, insider dealing is the legal term (under CJA 1993), while insider trading is the US term (under SEC rules).
Frequently Asked Questions
Is all insider trading illegal??
No, corporate insiders can legally trade if they report the trade and do not rely on non-public information, but trading while in possession of material inside info is illegal.
What is the penalty for insider trading??
Penalties can include fines, imprisonment, and disgorgement of profits; civil penalties under the SEC can be up to three times the profit gained or loss avoided.
What is a blackout period??
A period when company insiders are prohibited from trading securities, typically around earnings announcements, to avoid insider trading allegations.
Published: 2026-09-23 Category: Corporate Law