Negative Side of Insider Trading


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Insider trading is the trading in a security on the basis of material information that is inaccessible to the public. The US securities prohibit this kind of trade because of its unfairness and its potentiality of destroying investor confidence. A company insider is a person in possession of crucial information of a company that can affect the stock price or influence the decisions investors make. This kind of information is referred to as material information and is possessed by all company executives