Is insider trading legal?

Insider trading involves trading in a public company's stock or other securities by someone with non-public, material information about the company. Insider transactions are legal if the insider makes a trade and reports it to the Securities and Exchange Commission, but insider trading is illegal when the material information is still non-public.

Who is an insider in a stock market?

An insider is anyone who can access and provide valuable nonpublic information about a company or the ownership of stock (i.e. officers, directors, employees) and anyone who owns 10% of the company. A stockbroker who makes the trade isn’t necessarily an insider, but can still benefit from insider information.

Where can I find information on insider trading?

Quick tip: Anyone can search the public EDGAR database by date, company, person, filing category, or location to get information on legal insider trades. What are the penalties for insider trading?

Why is insider trading so expensive?

Insider trading also makes it more expensive for companies to issue stocks and bonds. If investors think that insiders might be trading bonds of a company, they will demand a higher return on the bonds to compensate for their disadvantage – increasing the cost to the company.