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Simple English definitions for legal terms
inside information
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A quick definition of inside information:
Inside information refers to information about a company's financial or market situation that is not available to the public, but is obtained from a source within the company or someone who has a duty to keep the information confidential. This information can be used to make trades in the company's stock, which is known as insider trading. Insider trading is illegal and can result in fines and imprisonment. It is important to only use information that is available to the public when making investment decisions.
A more thorough explanation:
Definition: Information about a company's financial or market situation obtained not from public disclosure, but from a source within the company or a source that owes the company a duty to keep the information confidential. This is also known as insider information.
Example: If a person who works for a company knows that the company is going to release a new product that will make the company's stock price go up, and they buy stock in the company before the news is made public, that is insider trading.
Explanation: The person had access to information that was not available to the public, and they used that information to make a profit. This is illegal because it gives the person an unfair advantage over other investors who do not have access to the same information.
Insider trading is a serious crime that can result in fines and even jail time. It is important for companies to have policies in place to prevent insider trading and for employees to understand the consequences of sharing confidential information.