Insider trading

Insider trading is buying or selling a company's stock based on material information that is not yet available to the public, such as knowing about an unannounced earnings result or merger in advance. It is illegal in most markets because it lets someone profit unfairly at the expense of other investors who do not have that information.

Regulators such as the SEC actively investigate and prosecute insider trading. Company insiders, such as executives and board members, are allowed to buy and sell their own company's stock, but they must disclose those trades publicly and are barred from trading around material information that has not yet been released.