Business and Personal Finance Dictionary

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• INSIDER TRADING
  
  When the management of a publicly held company, or members of its board of directors, or anyone else who holds more than 10% of the company, buys or sells its shares, the transaction is considered insider trading. This type of trading is perfectly legal, provided it's based on information available to the public. But insider trading is illegal if the buy or sell decision is based on knowledge of corporate developments-such as an executive change, an earnings report, or an acquisition or a takeover-that has not yet been made public. It is also illegal for people who are not part of the company, but who gain access to private corporate information-such as lawyers, investment bankers, or relatives of company officials-to trade the company's stock based on this inside information.
  
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