Insider trading sounds like secret agents and espionage, but it's a serious and very real financial crime 🕵️‍♂️

Insider trading is buying or selling a stock based on non-public information.

This is info that could affect a company's stock price if it were available to the public 📈📉

For example, let’s say a biotech company is about to get their drug approved by the FDA, an event that can often send their stock soaring 🚀

Now, imagine you paid one of the employees at the company to tell you about the impending approval, and then you decide to buy the stock ahead of the approval.

This is a classic example of insider trading 🚫

It’s illegal and people who get caught can receive huge fines as well as many years of jail time.

It's illegal when anybody, from executives to employees to normal investors like you, trades stocks based on secrets not available to the general public 🤫

But not all insider trading is against the law.

Employees or executives can buy or sell their own company's stock as long as their trades are properly disclosed to the SEC ✅

For example, Amazon founder Jeff Bezos sold over $6 billion worth of Amazon stock between Dec 2023 and Feb 2024, but he disclosed his trades properly and publicly so they are legal.

The key to legality is transparency.

Illegal insider trading on non-public information is unfair to other investors, so regulators take it very seriously to protect the fairness of the stock market 🌐