Here is another example. The president of a publicly owned company that is developing a new cancer fighting drug learns from a friend who works for the Food and Drug Administration (FDA) that the FDA is planning to announce in a few weeks that it not going to approve the company's new drug. Because the company's profitability will be hurt when the FDA announces its decision, he tells his stockbroker to sell some of the stock that he owns in his company before the FDA announces its decision. Is this illegal? If so, what type of crime is it?

Question

Quizplus · Accepted Answer

This is an example of insider trading, which is illegal. The president of the company obtained non-public information about the FDA's decision, which he then used to sell his own stock before the announcement was made to the public. This gave him an unfair advantage over other investors who did not have access to this information.

Here Is Another Example