insider trading
IN-sy-der TRAY-ding
/ɪnˈsaɪ.dər ˈtreɪ.dɪŋ/
The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
The crime isn't the trading itself, but the use of 'material non-public information' that gives the trader an unfair advantage.
The story behind the word. A modern financial term that gained prominence in the 20th century as stock markets became more regulated. It literally describes the 'inside' position of the person doing the 'trading'.
Word relationships
- securities fraud: Securities fraud is a broad category that includes insider trading as one of its specific types.
- fair trade: Trading based on publicly available information where all parties have equal access.
Commonly confused with
- market manipulation: Market manipulation involves creating false signals to influence stock prices, while insider trading uses real but secret information.
Collocations
- alleged insider trading
- convicted of insider trading
- prevent insider trading
Example sentences
- "Martha Stewart was convicted of charges related to insider trading after selling her ImClone shares just before a negative FDA ruling." A news report on a high-profile case.
- "Insider trading undermines investor confidence in the fairness and integrity of the securities markets." A definition from a financial regulator. (SEC Official Statement)
Memory hook
Think of someone 'inside' the boardroom whispering secrets to a 'trader' outside. Inside secrets lead to unfair trades.
When not to use
Do not use if the information used was available to the general public, even if it was hard to find.
Fun facts
- The first major US insider trading case involved William Duer, an Assistant Secretary of the Treasury, in 1792.
Related words
Explore more words
whistleblower, Share, graft, collusion, Arbitrage, embezzlement
Also appears in
Take your vocabulary further with LangBlitz
Our English vocabulary app: FSRS spaced repetition, 5,000+ curated words across 119 topic groups, CEFR A1 to C2. Explore your mastery with the beautiful Vocabulary World feature.