Not a lawyer…
Insiders have fiduciary duty to the company. This means they are required to put the company’s interest above their personal interest in various matters, including trading. Trading on insider information violates this, as it profits the insider above the other shareholders without this information.
Note they are still allowed to trade, but they are subject to some rules (including reporting).
Note also insider trading isn’t just limited to insiders, so based on these grounds the law covers scenarios where material non public information is held by non-insiders.
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