Material Insider Information

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DEFINITION of 'Material Insider Information'

Material information, about certain aspects of a company, that has not yet been made public but that will have at least a small impact on the company's share price once released. It is illegal for holders of material insider information to use the information - however it was received - to their advantage in trading stock, or to provide the information to family members or friends so they can use it to make trades.

BREAKING DOWN 'Material Insider Information'

Getting information that a company's expected earnings per share for a given quarter could be markedly poorer than expected, or getting information about developments in an ongoing lawsuit involving a company are both examples of material insider information.

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RELATED FAQS
  1. What is the difference between wash trading and insider trading?

    Wash trading is an illegal trading activity that artificially pumps up trading volume in a stock without the stock ever changing ... Read Full Answer >>
  2. How can I profit from monitoring open interest?

    Since markets experience asymmetric information between parties, monitor whether there is an imbalance between the open interest ... Read Full Answer >>
  3. If I write a blog post about stocks I own, is that considered insider trading?

    Writing a blog post about stocks you own is not considered insider trading. The only duty of the blogger is to disclose he ... Read Full Answer >>
  4. What are the key differences between pro forma statements and GAAP statements?

    The U.S. generally accepted accounting principles (GAAP) require companies to adhere to uniform reporting standards that ... Read Full Answer >>
  5. Why is moral hazard so prevalent in the financial services industry?

    Moral hazard tends to be prevalent in the financial services industry due to the nature of the industry, temptation and greed, ... Read Full Answer >>
  6. Can you accidentally engage in insider trading?

    In 2011, an article appeared in the New York Daily News titled "Insider trading is not always high-profile or intentional; ... Read Full Answer >>

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