INSIDER TRADING Meaning and
Definition
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Insider trading refers to the illegal practice of buying or selling stocks, bonds, or other securities based on confidential or non-public information that is not available to the general public but that has a significant impact on the value of the security. It involves individuals who have special access or are considered insiders, such as corporate officers, directors, employees, major shareholders, or professionals like lawyers, accountants, or consultants, using their privileged position to gain an unfair advantage in trading activities.
The act of insider trading undermines the principles of fairness, transparency, and equality in the financial markets. By utilizing insider information, individuals involved in this unlawful practice can make substantial profits at the expense of ordinary investors, who are not privy to such confidential information. Insider trading allows those with inside knowledge to exploit the difference between the market price and its real value, ultimately distorting market efficiency.
To combat insider trading, most jurisdictions have implemented strict regulations and laws. These regulations typically prohibit insiders from trading on material non-public information or require them to disclose such information to the public before trading. Violators of insider trading laws often face severe penalties, including hefty fines, imprisonment, and civil lawsuits, aiming to deter individuals from engaging in this fraudulent practice.
By discouraging insider trading, authorities aim to protect the integrity and fairness of financial markets, ensuring that all participants have equal opportunities and reducing the risk of market manipulation, insider abuse, and unfair advantages.
Common Misspellings for INSIDER TRADING
- unsider trading
- jnsider trading
- knsider trading
- onsider trading
- 9nsider trading
- 8nsider trading
- ibsider trading
- imsider trading
- ijsider trading
- ihsider trading
- inaider trading
- inzider trading
- inxider trading
- indider trading
- ineider trading
- inwider trading
- insuder trading
- insjder trading
- inskder trading
Etymology of INSIDER TRADING
The term "insider trading" is a combination of two separate words: "insider" and "trading".
The word "insider" is derived from the Middle English word "insyder", which was formed by combining the prefix "in-" (meaning "within" or "inside") and the Old English word "sīdan" (meaning "situated" or "placed"). Over time, "insider" came to refer to someone who has privileged information or is involved in an organization or group.
The word "trading" traces its roots back to the Middle English word "trade", which originated from the Old English word "trǣd" or "trǣdian". "Trade" originally meant a path or track, but it evolved to refer to the business or activity of buying and selling goods or services.
Similar spelling words for INSIDER TRADING
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