-What Is Insider Trading

Any person or corporate with some inside information of some impending event that will affect share price, should not buy or sell these shares. In the event of an impending dividend or bonus issue in XYZ Ltd for example, the price of the scrip soars. If employees of XYZ Ltd trade in the scrip in unusually large volumes, they are indulging in insider trading because they have information which the public does not. If, XYZ Ltd were to declare poor results and employees sold their shares in anticipation of fall in prices, that is also insider trading.