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What is Insider Trading?

Simply put, insider trading is the crime of trading in a company’s stock based on information not available to the general public.

According to the efficient market theory, any publicly available information is immediately "priced-in" to a stock, so any article you might find in a news publication is not going to give you a competitive advantage for a stock's future price movements.

Insider trading tips give an unfair advantage to the holder of the information, since the market has not had a chance to react to it yet. Of course, insider trading is illegal and several notorious cases have been well-publicized, like that of Martha Stewart. She was jailed.

What were the Biggest Insider Trading Scandals?
What are Some of the Biggest Bankruptcies in Recent History?

Keywords: market scandals, efficient market theory, illegal trading, insider trading,