Insider Trading

Insider trading refers to the buying or selling of stocks, bonds, or other securities by individuals who have non-public information about the company issuing those securities. It is considered illegal in most jurisdictions because it undermines the fairness and integrity of the financial markets. Insider trading occurs when insiders, such as company executives, directors, employees, or shareholders, use confidential or material information to gain an unfair advantage over other market participants.

Insiders have access to sensitive information, such as financial results, upcoming mergers or acquisitions, regulatory approvals, or other significant corporate events, that, if made available to the public, could significantly impact the stock or bond prices. By trading on this undisclosed information, insiders may realize substantial profits while others in the market are unaware of the information. Insider trading not only violates laws but also erodes public trust in the financial markets, as it creates an uneven playing field and compromises the principle of equal opportunity for all investors.

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