Insider Trading Examples
Consider another situation, when the employee who does not have access to the unpublished information, hears the conversation of his CEO saying that after this quarter’s results the share prices will be dropped. Hearing this he call his friend and told him to sell his shares and his friend successfully booked the profit before the share price goes down. In doing this, both people are found to be guilty and both can be fined or even imprisoned for their actions.
Unpublished Information:
In the above, there is a term used 'Unpublished Information'. This is called Unpublished Price Sensitive Information (UPSI). This can be any information that is not in the public domain that can affect the price of the shares. For example, Financial Reports, company mergers or any change in company policies are comes under UPSI.
Insider Trading
Sometimes there is some news that the stock exchange board has fined someone because he did insider trading of a company. Insider trading also had a small part in some movies like ‘Harshad Mehta scams’. Another popular stock market movie ‘Wall Street’ which was released in 1987 also mentioned insider trading.