InsiderFlow › Glossary › What is insider trading?

What is insider trading?

Insider trading means trading on privileged information: illegal if the information isn't public, legal and tracked when disclosed to the SEC.

The illegal version: buying or selling while knowing something the market doesn't yet — an earnings report, an acquisition, a rejected drug. In the US it carries multi-million fines and up to 20 years in prison: the Ivan Boesky and Raj Rajaratnam cases made history.

The legal version: executives may buy and sell their own company's shares, provided they disclose via Form 4 and don't use privileged information. That public data is a goldmine: insiders know their company better than anyone.

Concrete example

Martha Stewart went to prison in 2004 not for the sale itself, but for lying about the tip she received before selling her ImClone shares.

How you see it in InsiderFlow

InsiderFlow tracks insiders' SEC-disclosed trades and explains them in plain language, every day.

Frequently asked questions

How does the SEC catch illegal insider trading?

With algorithms flagging anomalous trades ahead of news, plus whistleblowers and traditional investigations.

Can you profit by following legal insiders?

Academic research shows insider purchases, in aggregate, precede above-average returns. No guarantee, but a real signal.