insider trading

The buying and selling of stock by an officer or director of a public company, or an individual or an entity owning 10% or more of any class of a company’s shares. Trading by insiders based on non-privileged information is legal, albeit highly regulated by the government. The U.S. Securities and Exchange Commission (SEC) requires insiders to file several reports outlining their transaction histories. Insiders are also typically limited as to when they may buy or sell the stock of a given company. Investors pay attention to insider buying and selling activities for clues to a company’s future prospects.