Insider trading is when a company’s securities are traded by individuals or entities with non-public, confidential information. Said individuals then use this information to purchase or sell the company’s securities for their own personal gain. Insider trading is a way to use classified information that may influence a security to profit or avoid major losses. When an individual makes a trading decision based on information that could impact the value of an organization’s securities or influence an investor’s decision making, it’s an illegal insider trade. How Does Insider Trading Work? An employee at a company may get information about the organization that will likely affect its stock price. For instance, they may know about an upcoming acquisition that could cause their stock to rise exponentially. If said individual acted on this insider info and bought a significant amount of their company stock right before the news went public, that would be classified as insider trading. Other examples of insider information that could influence the value of a security include loan defaults, the launch of new products, upcoming joint ventures, or new litigations. It’s important to