Involves trading of stocks and securities by a group or individuals who might have access to non-publicly available information which could affect the price of the company. There are two versions to Insider Trading: Public and private
Company executives “insiders,” are allowed to buy stocks in there own companies, with there own money, for there own accounts, as much as they want, as long as they declare their transactions publicly. Insiders have the most knowledge of the inner workings and future prospects of their company. There is undoubtedly plenty of important, non-public information influencing insiders’ investment decisions regarding their own firms’ shares.
Sometimes called the “Secret Hobby,” of executives on Wall Street. They have nothing better to do with their lives than figure out where their own company’s stock is headed, and then act on that information for their personal accounts. Insider’s may imagine a big event coming, maybe a few times in their working career. If they can get a pile of liquid capital together, they can trade in there own firms securities.
Although they cannot sell for at least six months, changes in ownership must be received at the SEC by the second business day following the trade, to let investors know how insiders are benefiting from the unfair advantage they have when trading in there own company’s shares.
Sumflow 05:12, March 30, 2011 (PDT)