QQQ   432.79 (+0.19%)
AAPL   188.32 (-0.58%)
MSFT   414.11 (+0.01%)
META   470.00 (+0.09%)
GOOGL   145.91 (+0.25%)
AMZN   169.84 (-0.40%)
TSLA   189.56 (+1.06%)
NVDA   696.41 (-0.65%)
NIO   5.82 (-0.68%)
AMD   169.35 (-0.93%)
BABA   70.74 (-3.94%)
T   16.82 (-2.94%)
F   12.83 (+0.23%)
MU   84.88 (-0.34%)
CGC   4.11 (-4.86%)
GE   139.07 (+0.41%)
DIS   110.54 (+11.50%)
AMC   4.09 (+3.81%)
PFE   27.56 (+0.00%)
PYPL   56.13 (-11.24%)
XOM   103.97 (+1.71%)
QQQ   432.79 (+0.19%)
AAPL   188.32 (-0.58%)
MSFT   414.11 (+0.01%)
META   470.00 (+0.09%)
GOOGL   145.91 (+0.25%)
AMZN   169.84 (-0.40%)
TSLA   189.56 (+1.06%)
NVDA   696.41 (-0.65%)
NIO   5.82 (-0.68%)
AMD   169.35 (-0.93%)
BABA   70.74 (-3.94%)
T   16.82 (-2.94%)
F   12.83 (+0.23%)
MU   84.88 (-0.34%)
CGC   4.11 (-4.86%)
GE   139.07 (+0.41%)
DIS   110.54 (+11.50%)
AMC   4.09 (+3.81%)
PFE   27.56 (+0.00%)
PYPL   56.13 (-11.24%)
XOM   103.97 (+1.71%)
QQQ   432.79 (+0.19%)
AAPL   188.32 (-0.58%)
MSFT   414.11 (+0.01%)
META   470.00 (+0.09%)
GOOGL   145.91 (+0.25%)
AMZN   169.84 (-0.40%)
TSLA   189.56 (+1.06%)
NVDA   696.41 (-0.65%)
NIO   5.82 (-0.68%)
AMD   169.35 (-0.93%)
BABA   70.74 (-3.94%)
T   16.82 (-2.94%)
F   12.83 (+0.23%)
MU   84.88 (-0.34%)
CGC   4.11 (-4.86%)
GE   139.07 (+0.41%)
DIS   110.54 (+11.50%)
AMC   4.09 (+3.81%)
PFE   27.56 (+0.00%)
PYPL   56.13 (-11.24%)
XOM   103.97 (+1.71%)
QQQ   432.79 (+0.19%)
AAPL   188.32 (-0.58%)
MSFT   414.11 (+0.01%)
META   470.00 (+0.09%)
GOOGL   145.91 (+0.25%)
AMZN   169.84 (-0.40%)
TSLA   189.56 (+1.06%)
NVDA   696.41 (-0.65%)
NIO   5.82 (-0.68%)
AMD   169.35 (-0.93%)
BABA   70.74 (-3.94%)
T   16.82 (-2.94%)
F   12.83 (+0.23%)
MU   84.88 (-0.34%)
CGC   4.11 (-4.86%)
GE   139.07 (+0.41%)
DIS   110.54 (+11.50%)
AMC   4.09 (+3.81%)
PFE   27.56 (+0.00%)
PYPL   56.13 (-11.24%)
XOM   103.97 (+1.71%)

Insider Trading Activity (Form 4 Filings)

An insider trade occurs when an individual that has non-public information about a company buys or sells shares of that company's stock. Examples of people who would be considered insiders include a company's executive officers (CEO, CFO, COO), its board of directors, and its major shareholders. Insiders are required to submit their trading activity to the Securities and Exchange Commission through Form 4 filings. Tracking a company's insider trading activity is an effective way to identify management's true outlook on the company's future growth and prospects. Below you will find MarketBeat's free insider trading tracker which reports the latest insider buying and selling activity from U.S., Canadian, and U.K. stock exchanges. What you need to know about insider trading.

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CompanyInsider NameBuy/SellShares Bought/SoldTotal TransactionShares Held After TransactionTransaction DateDetails
A. O. Smith Co. stock logo
AOS
A. O. Smith
Idelle K Wolf (Director)Sell814$65,120.00 46,1402/7/2024
ACV Auctions Inc. stock logo
ACVA
ACV Auctions
William Zerella (CFO)Sell32,500$457,275.00 305,5792/6/2024
Alphabet Inc. stock logo
GOOG
Alphabet
Sundar Pichai (CEO)Sell22,500$3,291,525.00 2,377,6912/7/2024
Alphabet Inc. stock logo
GOOGL
Alphabet
Sundar Pichai (CEO)Sell22,500$3,291,525.00 2,377,6912/7/2024
Ameriprise Financial, Inc. stock logo
AMP
Ameriprise Financial
Robert Francis Sharpe Jr (Director)Sell4,000$1,546,400.00 12,5002/6/2024
Arthur J. Gallagher & Co. stock logo
AJG
Arthur J. Gallagher & Co.
David S Johnson (Director)Sell500$117,020.00 45,0382/6/2024
Associated Banc-Corp stock logo
ASB
Associated Banc
John B Williams (Director)Sell2,700$52,785.00 62,8762/7/2024
Automatic Data Processing, Inc. stock logo
ADP
Automatic Data Processing
David Kwon (VP)Sell863$215,750.00 8,2852/6/2024
Axos Financial, Inc. stock logo
AX
Axos Financial
Andrew J Micheletti (EVP)Sell1,548$79,830.36 427,5352/6/2024
Bank First Co. stock logo
BFC
Bank First
Phillip R Maples (Director)Buy650$53,118.00 1,9832/6/2024
Bank of the James Financial Group, Inc. stock logo
BOTJ
Bank of the James Financial Group
William C Bryant III (Director)Buy3,450$41,400.00 64,9192/6/2024
BellRing Brands, Inc. stock logo
BRBR
BellRing Brands
Elliot Stein Jr (Director)Sell1,000$57,810.00 24,6462/7/2024
Berkshire Hills Bancorp, Inc. stock logo
BHLB
Berkshire Hills Bancorp
Michael Zaitzeff (Director)Sell19,660$436,452.00 200,0542/7/2024
Blue Bird Co. stock logo
BLBD
Blue Bird
Phil Horlock (CEO)Sell17,438$575,454.00 357,3742/8/2024
Booking Holdings Inc. stock logo
BKNG
Booking
Radakovich Lynn Vojvodich (Director)Sell59$218,300.00 2892/7/2024
Broadridge Financial Solutions, Inc. stock logo
BR
Broadridge Financial Solutions
Douglas Richard Deschutter (Insider)Sell22,722$4,521,678.00 44,6802/6/2024
Cadence Design Systems, Inc. stock logo
CDNS
Cadence Design Systems
Vincentelli Albert Sangiovanni (Director)Sell1,500$449,130.00 53,1832/6/2024
Caterpillar Inc. stock logo
CAT
Caterpillar
Lange Bob De (Insider)Sell21,194$6,899,070.88 61,0922/7/2024
Centene Co. stock logo
CNC
Centene
Kenneth J Fasola (President)Sell12,000$900,840.00 235,3652/7/2024
Cerevel Therapeutics Holdings, Inc. stock logo
CERE
Cerevel Therapeutics
John Renger (Insider)Sell2,161$89,767.94 6,3702/7/2024
Cerevel Therapeutics Holdings, Inc. stock logo
CERE
Cerevel Therapeutics
N Anthony Coles (Director)Sell2,506$104,099.24 15,6382/7/2024
Church & Dwight Co., Inc. stock logo
CHD
Church & Dwight
Rene Hemsey (EVP)Sell9,280$930,041.60 6,3732/7/2024
Commercial Metals stock logo
CMC
Commercial Metals
Barbara Smith (Chairman)Sell23,619$1,219,921.35 72,4002/7/2024
COMPASS Pathways plc stock logo
CMPS
COMPASS Pathways
Ekaterina Malievskaia (Director)Sell19,853$210,243.27 4,144,9942/6/2024
Danaher Co. stock logo
DHR
Danaher
Teri List (Director)Sell3,289$816,724.48 19,7262/6/2024
Datadog, Inc. stock logo
DDOG
Datadog
Olivier Pomel (CEO)Sell133,315$17,306,953.30 299,0752/6/2024
DoorDash, Inc. stock logo
DASH
DoorDash
Shona L Brown (Director)Sell700$76,797.00 71,5142/6/2024
Duolingo, Inc. stock logo
DUOL
Duolingo
Natalie Glance (Insider)Sell1,500$270,105.00 129,1882/6/2024
Edwards Lifesciences Co. stock logo
EW
Edwards Lifesciences
Heisz Leslie Stone (Director)Sell7,056$609,991.20 26,9802/8/2024
Enliven Therapeutics, Inc. stock logo
ELVN
Enliven Therapeutics
Anish Patel (COO)Sell4,875$73,661.25 12,3472/6/2024
Evercore Inc. stock logo
EVR
Evercore
Paul Pensa (Insider)Sell1,540$262,385.20 4,4472/7/2024
Fastenal stock logo
FAST
Fastenal
Anthony Paul Broersma (EVP)Sell5,586$387,333.242/6/2024
Federated Hermes, Inc. stock logo
FHI
Federated Hermes
Paul A Uhlman (VP)Sell90,745$3,199,668.70 289,9042/7/2024
FIGS, Inc. stock logo
FIGS
FIGS
Heather L Hasson (Insider)Sell27,547$163,353.71 499,3082/6/2024
First Interstate BancSystem, Inc. stock logo
FIBK
First Interstate BancSystem
Kristina Robbins (EVP)Sell2,710$69,999.30 9,0472/7/2024
Forge Global Holdings, Inc. stock logo
FRGE
Forge Global
Kelly Rodriques (CEO)Sell24,818$43,927.86 10,139,5072/6/2024
Graco Inc. stock logo
GGG
Graco
Timothy R White (Insider)Sell2,895$253,283.55 50,7822/7/2024
H.B. Fuller stock logo
FUL
H.B. Fuller
Muhammad Shahbaz Malik (VP)Sell14,000$1,067,920.00 9,0892/7/2024
HBT Financial, Inc. stock logo
HBT
HBT Financial
Roger A Baker (Director)Buy1,888$35,267.84 555,9802/7/2024
Hess Midstream LP stock logo
HESM
Hess Midstream
Infrastructure Investor Global (Director)Sell11,500,000$377,545,000.002/8/2024
Hubbell Incorporated stock logo
HUBB
Hubbell
Katherine Anne Lane (VP)Sell1,468$517,484.68 9,3552/6/2024
Hyzon Motors Inc. stock logo
HYZN
Hyzon Motors
Fuel Cell Technologies Horizon (Major Shareholder)Sell4,000,000$1,600,000.00 92,647,9862/6/2024
IES Holdings, Inc. stock logo
IESC
IES
Jeffrey L Et Al Gendell (CEO)Sell23,110$2,070,424.90 11,474,6252/7/2024
Illinois Tool Works Inc. stock logo
ITW
Illinois Tool Works
Ernest Scott Santi (Chairman)Sell50,000$12,722,000.00 221,0152/6/2024
Integral Ad Science Holding Corp. stock logo
IAS
Integral Ad Science
Lisa Utzschneider (CEO)Sell13,113$207,054.27 148,6572/6/2024
Intuitive Surgical, Inc. stock logo
ISRG
Intuitive Surgical
David J Rosa (President)Sell80,710$31,418,788.80 163,3992/7/2024
KalVista Pharmaceuticals, Inc. stock logo
KALV
KalVista Pharmaceuticals
Venrock Healthcare Capital Par (Major Shareholder)Buy4,474$65,946.76 4,743,1572/6/2024
KalVista Pharmaceuticals, Inc. stock logo
KALV
KalVista Pharmaceuticals
Venrock Healthcare Capital Par (Major Shareholder)Buy29,747$437,280.90 4,824,7312/8/2024
Kearny Financial Corp. stock logo
KRNY
Kearny Financial
Christopher Petermann (Director)Buy10,000$61,400.00 56,1392/8/2024
Kirby Co. stock logo
KEX
Kirby
Ronald A Dragg (VP)Sell1,413$119,652.84 10,6512/7/2024
Kirby Co. stock logo
KEX
Kirby
Christian G O'neil (Insider)Sell8,994$765,839.10 16,0792/6/2024
Kirby Co. stock logo
KEX
Kirby
David W Grzebinski (CEO)Sell7,000$593,040.00 84,3992/6/2024
Lantronix, Inc. stock logo
LTRX
Lantronix
Bernhard Bruscha (Major Shareholder)Sell9,409$56,736.27 5,406,4712/6/2024
LCNB Corp. stock logo
LCNB
LCNB
Lawrence P Jr. Mulligan (EVP)Buy4,000$55,800.00 16,4392/6/2024
Levi Strauss & Co. stock logo
LEVI
Levi Strauss & Co.
Tracy Layney (EVP)Sell15,894$270,515.88 41,4682/7/2024
Lifeway Foods, Inc. stock logo
LWAY
Lifeway Foods
Ludmila Smolyansky (Major Shareholder)Sell10,000$118,400.00 1,398,3282/6/2024
Lifeway Foods, Inc. stock logo
LWAY
Lifeway Foods
Ludmila Smolyansky (Major Shareholder)Sell22,747$264,092.67 1,364,7872/8/2024
Logitech International S.A. stock logo
LOGI
Logitech International
Samantha Harnett (Insider)Sell650$54,710.50 11,9102/8/2024
MACOM Technology Solutions Holdings, Inc. stock logo
MTSI
MACOM Technology Solutions
John Kober (CFO)Sell12,892$1,030,715.40 60,6722/6/2024
MACOM Technology Solutions Holdings, Inc. stock logo
MTSI
MACOM Technology Solutions
Susan Ocampo (Director)Sell65,993$5,280,099.93 8,045,6682/6/2024
MACOM Technology Solutions Holdings, Inc. stock logo
MTSI
MACOM Technology Solutions
Susan Ocampo (Director)Sell200,000$16,478,000.00 7,645,6682/8/2024
Manhattan Associates, Inc. stock logo
MANH
Manhattan Associates
James Stewart Gantt (EVP)Sell680$169,211.20 57,0932/6/2024
Manhattan Associates, Inc. stock logo
MANH
Manhattan Associates
Eddie Capel (CEO)Sell10,897$2,699,513.81 242,1532/6/2024
Micron Technology, Inc. stock logo
MU
Micron Technology
Sanjay Mehrotra (CEO)Sell7,000$593,880.00 788,5572/6/2024
MicroStrategy Incorporated stock logo
MSTR
MicroStrategy
Michael J. Saylor (Chairman)Sell5,000$2,456,600.002/7/2024
Monro, Inc. stock logo
MNRO
Monro
Michael T Broderick (CEO)Buy5,000$161,500.00 90,4872/2/2024
Natera, Inc. stock logo
NTRA
Natera
Jonathan Sheena (Insider)Sell6,000$420,000.00 18,1552/6/2024
nCino, Inc. stock logo
NCNO
nCino
Jeanette Sellers (VP)Sell894$27,874.92 20,7702/7/2024
Neurocrine Biosciences, Inc. stock logo
NBIX
Neurocrine Biosciences
Matt Abernethy (CFO)Sell1,280$182,003.20 29,4342/6/2024
Neurocrine Biosciences, Inc. stock logo
NBIX
Neurocrine Biosciences
Matt Abernethy (CFO)Sell980$131,525.80 30,3142/8/2024
Neurocrine Biosciences, Inc. stock logo
NBIX
Neurocrine Biosciences
David W Boyer (Insider)Sell456$64,733.76 4,8942/6/2024
Neurocrine Biosciences, Inc. stock logo
NBIX
Neurocrine Biosciences
David W Boyer (Insider)Sell1,328$179,824.48 4,8952/8/2024
Neurocrine Biosciences, Inc. stock logo
NBIX
Neurocrine Biosciences
Kevin Charles Gorman (CEO)Sell3,040$432,227.20 504,9192/6/2024
Neurocrine Biosciences, Inc. stock logo
NBIX
Neurocrine Biosciences
Kevin Charles Gorman (CEO)Sell2,274$305,057.10 506,9622/8/2024
nVent Electric plc stock logo
NVT
nVent Electric
Joseph A Ruzynski (Insider)Sell2,500$160,575.00 36,0132/7/2024
NVR, Inc. stock logo
NVR
NVR
Daniel David Malzahn (CFO)Sell2,000$14,505,660.00 13,2092/6/2024
NVR, Inc. stock logo
NVR
NVR
Matthew B Kelpy (CAO)Sell200$1,465,000.00 2302/6/2024
OFS Credit Company, Inc. stock logo
OCCI
OFS Credit
Eagle Point Credit Management (Major Shareholder)Sell13,515$305,709.30 123,2332/6/2024
ORIC Pharmaceuticals, Inc. stock logo
ORIC
ORIC Pharmaceuticals
Jacob Chacko (CEO)Sell13,958$169,170.96 794,5862/6/2024
Otis Worldwide Co. stock logo
OTIS
Otis Worldwide
Judith Fran Marks (CEO)Sell37,312$3,426,360.96 192,3192/7/2024
Palantir Technologies Inc. stock logo
PLTR
Palantir Technologies
Ryan D Taylor (Insider)Sell120,000$2,640,000.00 181,4602/6/2024
Palantir Technologies Inc. stock logo
PLTR
Palantir Technologies
Ryan D Taylor (Insider)Sell150,000$3,600,000.00 181,4602/8/2024
Post Holdings, Inc. stock logo
POST
Post
Thomas C Erb (Director)Buy1,000$104,240.00 33,4752/7/2024
Power Integrations, Inc. stock logo
POWI
Power Integrations
David Mh Matthews (Insider)Sell1,095$80,986.20 59,7332/6/2024
Power Integrations, Inc. stock logo
POWI
Power Integrations
Doug Bailey (VP)Sell822$60,795.12 99,1062/6/2024
Power Integrations, Inc. stock logo
POWI
Power Integrations
Balu Balakrishnan (CEO)Sell5,746$421,698.94 513,6932/6/2024
Power Integrations, Inc. stock logo
POWI
Power Integrations
Sandeep Nayyar (CFO)Sell1,642$121,442.32 70,1712/6/2024
Progyny, Inc. stock logo
PGNY
Progyny
Michael E Sturmer (President)Sell2,260$90,400.00 158,5322/6/2024
Recursion Pharmaceuticals, Inc. stock logo
RXRX
Recursion Pharmaceuticals
Blake Borgeson (Director)Sell11,447$106,457.10 7,312,9172/6/2024
RTX Co. stock logo
RTX
RTX
Ramsaran Maharajh (EVP)Sell312$28,757.04 11,6762/7/2024
RTX Co. stock logo
RTX
RTX
Neil G Mitchill Jr (CFO)Sell1,545$142,696.20 49,8942/7/2024
RTX Co. stock logo
RTX
RTX
Christopher T Calio (COO)Sell367$33,995.21 56,7072/7/2024
Saia, Inc. stock logo
SAIA
Saia
Richard D Odell (Director)Sell10,000$5,367,500.00 5,9892/6/2024
Salesforce, Inc. stock logo
CRM
Salesforce
Marc Benioff (CEO)Sell15,000$4,324,500.00 13,551,1662/7/2024
Samsara Inc. stock logo
IOT
Samsara
Sanjit Biswas (CEO)Sell79,165$2,487,364.30 38,4002/6/2024
Samsara Inc. stock logo
IOT
Samsara
John Bicket (Insider)Sell79,236$2,490,387.48 38,4002/6/2024
SentinelOne, Inc. stock logo
S
SentinelOne
David J Bernhardt (CFO)Sell2,631$72,826.08 347,1532/6/2024
SentinelOne, Inc. stock logo
S
SentinelOne
Ric Smith (Insider)Sell2,207$61,089.76 455,3742/6/2024
SentinelOne, Inc. stock logo
S
SentinelOne
Tomer Weingarten (CEO)Sell10,165$281,367.20 797,2652/6/2024
Solid Power, Inc. stock logo
SLDP
Solid Power
Joshua Buettner-Garrett (CTO)Sell187,500$296,250.00 356,4332/7/2024
Sonos, Inc. stock logo
SONO
Sonos
Thomas Conrad (Director)Sell5,337$97,720.47 37,3342/7/2024
Sono-Tek Co. stock logo
SOTK
Sono-Tek
Joseph Riemer (Director)Sell5,335$30,409.50 18,6622/7/2024
South Plains Financial, Inc. stock logo
SPFI
South Plains Financial
Noe G Valles (Director)Buy30,000$810,000.00 195,5122/6/2024
Spire Inc. stock logo
SR
Spire
Joseph B Hampton (Insider)Sell1,294$75,220.22 6,7682/7/2024
Standex International Co. stock logo
SXI
Standex International
Barbara Joanne Edwards (Director)Sell1,661$252,787.59 4,8112/7/2024
Tango Therapeutics, Inc. stock logo
TNGX
Tango Therapeutics
Adam Crystal (Insider)Sell4,288$53,857.28 123,5612/6/2024
The Ensign Group, Inc. stock logo
ENSG
The Ensign Group
Christopher R Christensen (Chairman)Sell57,982$6,844,775.10 155,7032/6/2024
The Ensign Group, Inc. stock logo
ENSG
The Ensign Group
Christopher R Christensen (Chairman)Sell10,800$1,269,648.00 147,4002/8/2024
The Hartford Financial Services Group, Inc. stock logo
HIG
The Hartford Financial Services Group
Allison G Niderno (SVP)Sell1,332$119,533.68 6302/6/2024
The Hartford Financial Services Group, Inc. stock logo
HIG
The Hartford Financial Services Group
David C Robinson (EVP)Sell15,000$1,344,600.00 8,2012/6/2024
The Travelers Companies, Inc. stock logo
TRV
Travelers Companies
Daniel S Frey (CFO)Sell38,000$8,076,900.00 14,8102/6/2024
Thermo Fisher Scientific Inc. stock logo
TMO
Thermo Fisher Scientific
Marc N Casper (CEO)Sell10,000$5,556,300.00 49,1552/7/2024
Thermo Fisher Scientific Inc. stock logo
TMO
Thermo Fisher Scientific
Michael A Boxer (SVP)Sell14,566$8,186,092.00 12,9012/7/2024
TransMedics Group, Inc. stock logo
TMDX
TransMedics Group
Edward M Basile (Director)Sell7,157$618,221.66 8,3502/6/2024
Viking Therapeutics, Inc. stock logo
VKTX
Viking Therapeutics
Brian Lian (CEO)Sell269,079$7,230,152.73 2,184,8822/8/2024
Viking Therapeutics, Inc. stock logo
VKTX
Viking Therapeutics
Sarah Kathryn Rouan (Director)Sell25,000$701,250.002/8/2024
Visa Inc. stock logo
V
Visa
Peter M Andreski (CAO)Sell2,615$729,271.20 4,8982/7/2024
Wabash National Co. stock logo
WNC
Wabash National
Larry J Magee (Director)Sell3,086$81,779.00 114,1462/7/2024
Insider Trading - What You Need to Know

In a digital world, insider trading is becoming easier, and harder, to define


According to the Securities & Exchange Commission (SEC) insider trading “refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.”

That definition would seem to imply that insider trading violations only occur when someone acts on the information. However, the SEC also says that insider trading violations also include the act of “tipping” inside information.

This is because for something to constitute insider trading individuals must have access to information that the general public does not have the ability to access. And, the individuals then act on that information to inform trading usually of specific equities.

Continue reading this article to help you understand the topic of insider trading. We’ll define insider trading and look at important specifics such as what makes someone an insider, why insider trading is harmful to markets and to the point we just made under what conditions insider trading can be legal.

There are three conditions that have to be met for an act of insider trading to be illegal:

  1. Information must be passed along by an insider.
  2. The individual(s) receiving the information must act upon (traded) that information.
  3. The trading activity must take place before the tipped information is available to the general public.

That last point is a key one to understand. In many cases, the information used for a trade becomes public knowledge. The point is that if an individual were to find out something days or weeks before the general public, they could prepare a trade to maximize their own gain.

Two recent high-profile cases illustrate the relationship between insiders and insider trading. The first involved American retail businesswoman, writer, and television personality Martha Stewart. In this case, Stewart received a tip from her broker who worked at Merrill Lynch. Stewart did not work for the company in question nor did she work for Merrill Lynch. However, she was an existing shareholder of the stock in question.

Stewart was convicted of insider trading based on evidence that she had made trades before the information that was tipped to her became public. She served five months in prison and two years of probation including five months under house arrest.

The other case involves Mychal Kendricks a professional football player. Kendricks entered and exited trades based on information he received from an acquaintance who was a broker with Goldman Sachs. This case was a bit greyer because Kendricks was not a client of the broker. Nevertheless, he was given access to confidential information that could materially affect the price of the securities he traded prior to that information being released to the public. Kendricks served one day in prison, was sentenced to three years of probation and 300 hours of community service.

Once again, let’s look at what the SEC has to say about this. The commission says the definition of who is an insider “can include officers, directors, major stockholders and employees of an entity whose securities are publicly traded.” This is a broad definition that is intended to presume that insiders should put the company’s interest ahead of their own.

The SEC policy states that, in general, “an insider must not trade for personal gain in the securities of that entity if that person possesses material, nonpublic information about the entity.” They go on to say that individuals “must not disclose that information to family, friends, business or social acquaintances, employees or independent contractors of the entity.” However, an insider may make trades or discuss the information after it has been made public.

As it relates to insider trading, the definition of “insider” expands even more. In fact, any individual who buys or sells shares of a security based on inside information can be guilty of insider trading.

The first reason that insider trading is harmful relates to the insider’s fiduciary duty. A common question that gets asked is why shouldn’t individuals benefit from having insider information? The answer is they are supposed to put the company’s interests ahead of their own. This includes brokers and analysts who have access to this information. When that information is traded on, they are allowing that information to be used to benefit others ahead of the company.

This idea of benefiting some to the exclusion of others leads to the second fundamental harm of insider trading. It violates the principle of transparency. When the market is functioning properly both retail and institutional investors have access to the same information. At times, you already hear retail traders claiming the market is a rigged game. If insider trading was allowed to proceed without any consequences, retail investors would lose even more confidence in the market.

In reality, it’s not but it has to do with intent of the person giving the information. In the case Dirks v. SEC, the Supreme Court determined, “the mere disclosure of material, nonpublic information, by itself, does not necessarily constitute a breach of an insider’s fiduciary duties.”

What does that mean in plain terms? If someone overhears a conversation in which insider information is disclosed, they can act on the information if they were not aware that it was confidential. This was the premise behind the ruling in the Dirks v. SEC case.

At that time, Barry Switzer was the head football coach at the University of Oklahoma. Switzer overheard a conversation between the former CEO of Texas International and his spouse while at a track meet in Texas. The former CEO had no idea that Switzer heard the information and Switzer had no idea the information was confidential. The case went to trial and the Supreme Court ruled that the CEO did not breach his fiduciary duties. However, this was only because the CEO was engaged in what he had reason to believe was a private conversation. If he was relaying that information to Switzer himself, even if he believed the information wouldn’t be acted on, it would have met the standard for insider trading.

The key definition of insider trading stems from the word trading, which constitutes an action. Here’s a hypothetical example.  Jane is an executive at XYZ Company. She knows that the company is going to acquire another company and shares that information with family and friends before it becomes public information.

In and of itself, that does not constitute insider trading. It does, however, become insider trading if anyone who is privy to that information uses it to make enter and/or exit trades prior to the information going public.

The same logic goes for those that receive the information. If they don’t act on it, then it’s just information. If they make trades based on it, then it constitutes insider trading.

However, this serves to clarify the importance of the insider not disclosing the information. They may trust their family members and close friends to not trade the news. However, once the information is out, they have less control of who else may hear about it and act on it.

With every example we’ve discussed, how can insider trading ever be legal? The answer is only under very restrictive conditions. First, the trade must be reported to the SEC via a Form 4 within two business days of when the trade occurred. This will make the trade part of the public record. Additionally, the trader must list all the company’s directors and officers along with any share interest they have in a Form 14a filing.

Although insider selling frequently draws the attention of retail investors, the reality is that company insiders sell company stock. And they can do so for a lot of reasons, many being personal.

Information about insider trades is available on many financial websites. However, the best place to look is the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) database. Furthermore, SEC rules prevent insiders from trading company stock within any six-month period.

With that in mind, it’s more telling when insiders buy their company’s stock. To do so under those conditions, an investor could not be blamed for presuming the company’s outlook was good.

Insider trading seems simple enough to understand, and yet it’s one of the more misunderstood terms in the financial world. It’s not as abstract as “you know when you see it” but whether something constitutes insider trading really comes down to access and intent.

The everyday retail trader or investor has access to more information than ever before. And there are professional traders and analysts who publish content to keep fueling this news cycle. In a certain way, that makes defining insider trading a little easier. Simply put, there’s a lot of information, including speculative rumors, that is found in the public domain.

In the end, there are two basic questions that have to be asked. One is the information idle speculation or is it credible information from someone with access? Second, is the information in the public domain?

In the case of illegal insider trading, the intent is to act on inside information before the public has knowledge of it. In this way, a select few “insiders” can profit from the information.

However, legal insider trading has always existed. And if properly disclosed, it can be a benefit to retail and institutional investors as a supplement to fundamental or technical analysis.

 

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