I tried researching (I’ve been watching Suits and I’m at the part when Stutter is accused of insider trading) and I still don’t understand what they mean by “making trades based on nonpublic information”. So please explain like I’m five what this really means.
In: Economics
A good example would be your the lead researcher at a pharma company that is highly valued due to the new medicine you are developing. However you just the first human test results just arrived on your desk that show it’s completely ineffective in humans.
Insider trading would be if you immediately logged in and sold teh stock you hold in the company before that information gets out and everybody sells lowering the price.
For this reason key staff members like the CEO and upper management are usually required to announce/plan buying and selling in advance. eg if you want money for a new yacht for a holiday in June you would have to announce and commit in January that you will sell x number of shares in June
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