Insider trading is not categorically illegal; it becomes illegal when it involves trading based on material, non-public information. Choices A, B, C, and D do not accurately capture the nuances of insider trading laws. The legality of insider trading depends on the circumstances, including whether the insider has material, non-public information at the time of the trade.

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Insider Trading Is

Question 379

Multiple Choice

Insider trading is:

A) legal if no profit is made
B) legal if the insider gets an outsider to buy or sell
C) illegal because insiders are strictly prohibited from stock trading under SEC Rule 10b-5
D) illegal because employment contracts for insiders prohibit trading in the securities issued by their employer
E) none of the other choices

Correct Answer: