Insider Trading

The process of buying or selling the stock of a publicly traded company by someone who has non-public, material information regarding the stock is known as insider trading. It can be legal or illegal which depends on when the insider makes the trade and it becomes illegal when material information is still non-public.
Material information, in this context, refers to any information that could substantially impact the decision of an investor to buy or sell security. And, information that is not legally available to the public is referred to as non-public information. Insider trading is considered to be legal as long as the process conforms to the rules put forward by the U.S. Securities and Exchange Commission (SEC).

For example, former Amazon.com Inc. (AMZN) financial analyst Brett Kennedy was charged with insider training in the year 2017 on account of giving information on Amazon’s 2015 first quarter earnings before its release to his fellow University of Washington alumni Maziar Rezakhani. He paid Kennedy an amount of $10,000 for receiving this information. In a related case, it was reported by the SEC that Rezakhani, out of the tip from Kennedy, made $115,997 through trading.

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