Insider trading refers to the purchase or sale of securities by someone with information that’s material and not in the public realm. It can be done by not only company management, directors and employees but also by outside investors, brokers and fund managers.
Certain types of insider trading have become illegal through the interpretation of other laws, such as the Securities Exchange Act of 1934, by the courts. Insider trading by a company’s directors can be legal as long as they disclose their buying or selling activity. To their relevant financial regulator within their jurisdiction and that information subsequently becomes public.
Where it’s best known to pass through the Stock Exchange, and all charges are legal. However, this type of trade in the interior-is governed by very specific laws and regulations. Yes, the line for what constitutes insider information isn’t always so clear. But there are signs that can help you understand or spot if Inside Trading is occurring right under your very nose.
Especially if you buy shares or trade in the stock market. You have to be very aware of insider trading. As it can have a major effect on you.
Therefore you can look for cryptic messages usually placed in company emails
Subscribe to press any of your general area can publish business-related articles, or to newsletters or e-mail that the company can send. This is where insiders usually artfully craft emails to tip off coworkers that they’ve insider information.
If something isn’t right within the company
Find out by doing your research all you can by performing your own background check. Generally you can find information about anyone in the online world.
The internet is one of the greatest sources of information when it tries to unravel the world of privileged information, so look before diving. Or go the old fashion route. If you’ve friends who work for the company ask “what’s new?” They’re sure to spill the beans.
Any sign of doubt or hesitant senior management, is usually a sure fire sign that something is up.
Therefore learn as much as you can about CEOs of companies and organisations that you own stock in. To protect yourself, you should monitor and alert to any unusual or unreasonable behaviour.