It is not illegal for investors to take positions in a stock based on inside information that they received from an insider at the company, although it would be illegal for the insider to take a position based on that information.

Question

Quizplus · Accepted Answer

It is illegal for investors to trade on material, non-public information received from an insider, as this constitutes insider trading, which is a violation of securities laws.

It Is Not Illegal for Investors to Take Positions in a Stock