Insider Information

What is 'Insider Information'

Insider information is a non-public fact regarding the plans or condition of a publicly traded company that could provide a financial advantage when used to buy or sell shares of the company's stock. Insider information is typically gained by someone who is working within or close to a listed company. If a person uses insider information to place trades, he or she can be found guilty of insider trading. Insider trading is illegal when the material information has not been made public and has been traded on. This is because the information gives those having this knowledge an unfair advantage.

BREAKING DOWN 'Insider Information'

Insider information is knowledge about a publicly traded company that could be used to an investor's advantage. Knowing about a company's significant, confidential corporate developments, such as the release of a new product, could provide an unfair advantage if the information is not public, that is, if only a few people know about the developments.


In the United States, the Securities and Exchange Commission (SEC) regulated legal insider trades - where corporate insiders, including officers, directors and employees, buy and sell stock in their own companies. In addition, the SEC investigates instances of illegal insider trading. Those found guilty of insider trading can serve jail time and be fined.

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RELATED FAQS
  1. What's the difference between insider trading and insider information?

    Learn about insider information and insider trading and the differences between the two; both involve nonpublic information ... Read Answer >>
  2. What exactly is insider trading?

    An "insider" is any person who possesses at least one of the following: 1) access to valuable non-public information about ... Read Answer >>
  3. How often should I measure my company's key performance metrics (KPIs)?

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  4. Can you accidentally engage in insider trading?

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  5. What is the difference between wash trading and insider trading?

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  6. If I write a blog post about stocks I own, is that considered insider trading?

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