Legal Definitions - inside information

Definition:Information about a company's financial or market situation obtained not from public disclosure, but from a source within the company or a source that owes the company a duty to keep the information confidential. This is also known as insider information.

Example: If a person who works for a company knows that the company is going to release a new product that will make the company's stock price go up, and they buy stock in the company before the news is made public, that is insider trading.

Explanation: The person had access to information that was not available to the public, and they used that information to make a profit. This is illegal because it gives the person an unfair advantage over other investors who do not have access to the same information.

Insider trading is a serious crime that can result in fines and even jail time. It is important for companies to have policies in place to prevent insider trading and for employees to understand the consequences of sharing confidential information.