Insider

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DEFINITION of 'Insider'

A director or senior officer of a company, as well as any person or entity that beneficially owns more than 10% of a company's voting shares. For purposes of insider trading, the definition is expanded to include anyone who trades a company's shares based on material non-public knowledge. Insiders have to comply with strict disclosure requirements with regard to the sale or purchase of the shares of their company.

INVESTOPEDIA EXPLAINS 'Insider'

Securities legislation in most jurisdictions has stringent rules in place to prevent insiders from taking advantage of their privileged position for pecuniary gain through insider trading. Offenses are punishable by disgorgement of profits and fines, as well as incarceration for severe offenses.

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