insider trading


Definition of insider trading

: the illegal use of information available only to insiders in order to make a profit in financial trading

Examples of insider trading in a Sentence

Recent Examples on the Web In the insider trading case, the SEC aimed to get Cohen banned for life from the money-managing business. Dennis Young,, "Reports: Greenwich billionaire Steve Cohen to become majority owner of New York Mets," 4 Dec. 2019 Two years later, Aggarwal resigned from the company following insider trading charges during his time at a wealth management firm in the US. Itika Sharma Punit, Quartz India, "Shopclues’ sale for a pittance lets out Indian e-commerce’s open secret: distress," 1 Nov. 2019 Another early Trump supporter, Republican U.S. Rep. Chris Collins of New York, ended his re-election bid this month, days after his indictment on insider trading charges. Michael R. Blood And Julie Watson, The Seattle Times, "Uncertainty looms over House race after Hunter indictment," 21 Aug. 2018 Swiss and other European regulators have stepped up efforts in recent years to prevent insider trading and other market abuses, but take far less action against individuals and firms than their U.S. counterparts. Margot Patrick, WSJ, "Switzerland Bans Unnamed Former Bank CEO Over Insider Trading," 24 Jan. 2020 The Republican lawmaker was sentenced to 26 months for conspiracy to commit insider trading and 26 months for lying to the FBI, to be served concurrently. NBC News, "Former N.Y. Rep. Christopher Collins sentenced to federal prison for insider trading," 17 Jan. 2020 Chris Collins, who was the first member of Congress to endorse President Trump, pleaded guilty to the charges of insider trading in October. Kerry Picket, Washington Examiner, "Ex-GOP congressman whose 'shtick' was business principles to be sentenced for insider trading," 13 Jan. 2020 Securities regulators charged a former employee of Palo Alto Networks and four of his friends with insider trading. Adam Lashinsky, Fortune, "Facebook Says Libra Isn’t Really a Currency After All," 19 Dec. 2019 The ad includes a clip of Cooperman and notes that the hedge fund manager was once charged with insider trading by the Securities and Exchange Commission. Washington Post, "Wall Street feuds with Warren, much to her apparent delight," 14 Nov. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'insider trading.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of insider trading

1966, in the meaning defined above

Keep scrolling for more

Learn More about insider trading

Time Traveler for insider trading

Time Traveler

The first known use of insider trading was in 1966

See more words from the same year

Statistics for insider trading

Last Updated

18 Feb 2020

Cite this Entry

“Insider trading.” Dictionary, Merriam-Webster, Accessed 24 Feb. 2020.

Keep scrolling for more

More Definitions for insider trading

insider trading


Financial Definition of insider trading

What It Is

Insider trading refers to the trading of securities by corporate insiders such as managers or executives.

How It Works

Insider trading can be legal or illegal depending on if the information used to base the trade is public.

Individuals who engage in illegal insider trading attempt to benefit from trades based on information about a company not yet made public. For example, an executive of Company XYZ who purchases shares of the company based on a pending merger announcement is engaging in illegal insider trading.

However, once Company XYZ has announced the merger publicly, insiders may legally trade the shares based on the information.

Insider transactions must be reported to the Securities and Exchange Commission (SEC) via Form 4.

Why It Matters

Some investors follow legal insider trading because they believe insiders have a better insight to the financial health of a company.

For example, a CEO buying shares of his company conveys confidence in the future of the business.

Meanwhile, illegal insider trading can lead to fine and even imprisonment for the guilty party.

Source: Investing Answers

insider trading


English Language Learners Definition of insider trading

finance : the illegal activity of buying and selling a company's stocks while using secret information from a person who works for the company

insider trading


Legal Definition of insider trading

: the illegal use of especially material inside information for profit in financial trading — see also tippee

More from Merriam-Webster on insider trading Encyclopedia article about insider trading

Comments on insider trading

What made you want to look up insider trading? Please tell us where you read or heard it (including the quote, if possible).


See Definitions and Examples »

Get Word of the Day daily email!

Test Your Vocabulary

More Confusing Words—Quiz

  • cats on impossible timber
  • The magician ______ moved the selected card to the top of the deck.
Spell It

Can you spell these 10 commonly misspelled words?


Test Your Knowledge - and learn some interesting things along the way.

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!