Legal Definitions - tippee

Definition: A tippee is a person who receives material nonpublic information from someone who has a fiduciary relationship with the company to which that information pertains.

Example: John works for a company that is about to release a new product. He tells his friend, Sarah, about the product before it is publicly announced. Sarah buys stock in the company based on this information. Sarah is considered a tippee because she received material nonpublic information from John, who had a fiduciary relationship with the company.

Explanation: The example illustrates how a tippee can receive information that is not available to the public and use it to make investment decisions. This is illegal because it gives the tippee an unfair advantage over other investors who do not have access to the same information. The Securities and Exchange Commission (SEC) enforces laws against insider trading to prevent this type of unfair advantage.