DEFINITION of 'Insider Buying'

The purchase of shares of stock in a corporation by someone who is employed by the company. Insider buying should not be confused with insider trading. Insider trading refers to corporate insiders trading on private information, an activity that is illegal. However, insider buying is based on public information in a situation where insiders believe that their stock is undervalued.

BREAKING DOWN 'Insider Buying'

Insider trading is often a temptation faced by corporate officers and board members who know of new products or inventions that could cause the stock price to rise. Those in this position must carefully adhere to special regulations when purchasing stock in their companies to avoid penalties. On the other hand, insider trading typically occurs when employees believe that the public is not valuing their stocks properly. Because insider transactions are public information, knowing that insiders are purchasing stock can signal future stock appreciation.

  1. Insider

    A director or senior officer of a company, as well as any person ...
  2. Insider Information

    Insider information is a non-public fact regarding the plans ...
  3. Inside Days

    A charting term used by technical analysts and day traders. Inside ...
  4. Insider Trading Sanctions Act Of ...

    Legislation that allows the SEC to seek a civil penalty, of up ...
  5. Form 3

    A document that must be filed with the Securities and Exchange ...
  6. Inside Quote

    The best bid and ask prices offered to buy and sell a security ...
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