Buying and selling securities on the basis of insider information is against the law

Question

Quizplus · Accepted Answer

Insider trading is illegal for those who obtained the information because of their position within the firms involved in the trade. It is based on the principle of fairness and prohibiting this practice helps prevent the exploitation of knowledge that the general public does not have access to. Insider trading laws apply to all securities traded in the United States, not just in New York. Refusing to divulge insider information is not the same as actually trading on that information, so it is not illegal in itself, although not divulging it can be a violation of SEC regulations under some circumstances.

Buying and Selling Securities on the Basis of Insider Information