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Insider Trading

Definition - What does Insider Trading mean?

Insider trading refers to the trading of the stock of a public company by a person or persons who know information that is not available to the general public. Most people associate the term insider trading with illegal conduct. In reality, there is insider trading that is both legal and illegal.

Justipedia explains Insider Trading

The legal type of insider trading occurs when a person buys or sells stock within his or her own company. In other words, this is when two employees from the same company enter into a transaction where one person is selling the stock and the other person is buying the stock. The illegal type of insider trading occurs when a person sells stock when that individual has confidential information about the future value of the stock.

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