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Insider Trading

Insider trading refers to the practice of buying or selling securities on a stock or some other exchange to one’s advantage through having access to confidential (nonpublic) information. Insider trading is a term usually associated with illegal conduct. However, it includes both legal and illegal trading behavior. The legal version is when corporate insiders—executives, directors, and employees—buy and sell stock in their companies. This is increasingly common with the growth of stock and stock options as components of executive and employee remuneration packages, where these parties, whether they currently hold securities or not, routinely have access to information that is not available in the public domain and may therefore entail profitable opportunities for trading. It is also common, and some regard it as preferable for ...

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