Insider Trading

            
             An "insider," according to the United States Securities and Exchange Commission (SEC), is any director or senior officer of a company or a subsidiary, as well as those people who can be presumed to have access to inside information. Anyone owning more than 10 per cent of voting shares in a company is also considered an insider by the SEC. Contrary to public perception; most insider trading is perfectly legal. Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and prosecution of insider trading violations as one of its enforcement priorities. .
             In the United States, insider trading has been illegal since 1934. The Securities and Exchange Commission (SEC), the United States government agency created by the Securities Exchange Act (1934), protects this practice. It requires companies "to submit full public-disclosure statements before issuing securities on the open market-(Cross & Miller 155). The SEC regards the practice of insider trading as unfair to investors. It also regulates stock exchanges, brokers, and dealers in securities, and sets margin requirements for bank credit in security trading. The laws restricting insider trading define "inside information- as information that is both "material- and "nonpublic."" Material information includes any information that is public. .
             Corporate directors and officers often obtain advance inside information because of their positions. "Sometimes the information can affect the future market value of the corporate stock-(Macey 114). It is obvious that their positions can give them a trading advantage over the general public and shareholders.