insider trading

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Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In many countries, some kinds of trading based on insider information are illegal. The rationale for this prohibition of insider trading differs between countries and regions. Some view it as unfair to other investors in the market who do not have access to the information, as the investor with inside information can potentially make larger profits than an investor without such information. However, insider trading is also prohibited to prevent the directors of a company (the insiders) from abusing a company's confidential information for the directors' personal gain.