insider trading

noun

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

This is the second insider trading case U.S. attorneys are pursuing related to the Equifax hack. Alex Soderstrom, ajc, "Ex-Equifax employee charged with securities fraud tied to data hack," 29 June 2018 Schultz Chan, Akebia’s former director of biostatistics, is on trial in US District Court in Boston for allegedly engaging in an insider trading scheme in 2015 with a friend at another drug company. Jonathan Saltzman, BostonGlobe.com, "Two Mass. biotechs merging to focus on kidney disease drugs," 28 June 2018 Stewart was convicted in 2004 of obstructing justice and lying to the government as part of an insider trading case. Brooke Singman, Fox News, "Trump says he’s considering pardoning Martha Stewart, Rod Blagojevich," 1 June 2018 In Europe, though no breach of duty is needed to prove insider trading, the bar is higher in other ways. The Economist, "Hedge funds worry about the legal risks of using “alternative” data," 21 June 2018 Jun Ying, a former executive at the company, was indicted in March on charges of insider trading. Alex Soderstrom, ajc, "Ex-Equifax employee charged with securities fraud tied to data hack," 29 June 2018 Intel insists that the sale was unrelated to those security issues and was not insider trading. Peter Bright, Ars Technica, "Intel CEO Brian Krzanich resigns over workplace relationship," 21 June 2018 Dinesh D'Souza was convicted for campaign finance violations, Martha Stewart for securities transactions, insider trading, Rod Blagojevich for political corruption. Fox News, "Preparations for a Trump-Kim summit getting back on track," 3 June 2018 The Securities and Exchange Commission, the Wall Street regulator that combats insider trading, declined to comment. Adam Shell, USA TODAY, "Trump tweet on jobs report may have breached a 1985 federal directive," 1 June 2018

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.

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First Known Use of insider trading

1966, in the meaning defined above

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Last Updated

16 Sep 2018

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The first known use of insider trading was in 1966

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More Definitions for insider trading

insider trading

noun

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

noun

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

noun

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

Britannica.com: Encyclopedia article about insider trading

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