Insider Trading
Definition
Trading securities based on material, non-public information — illegal when the trader has a fiduciary duty or obtained information through deception.
Explanation
Insider trading comes in two forms: legal (corporate insiders buying/selling their own company's stock, reported to the SEC on Form 4) and illegal (trading on material, non-public information). Legal insider buying is often a bullish signal — executives buying with their own money suggests confidence. The SEC prosecutes illegal insider trading aggressively, with penalties including fines up to 3x profits gained and up to 20 years imprisonment. Famous cases: Ivan Boesky, Raj Rajaratnam (Galleon Group), Martha Stewart.
How Stoquity Uses This
Stoquity incorporates insider trading analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.