What term refers to the illegal trading of a company's stock by people with access to confidential information?

• A. Insider Trading
• B. Market Manipulation
• C. Front Running
• D. Insider Information

Answer: (A)

Insider trading is the act of trading a company’s stock based on non-public, material information. When someone with access to confidential details—like an executive, employee, or someone who has received a tip—uses that information to buy or sell shares, it undermines fair markets and breaches trust, which is why this behavior is illegal in many places.

This term specifically captures the illicit activity of using inside information to gain an unfair advantage. It’s different from market manipulation, which involves deceiving others to move prices, and from front running, where a trader uses advance knowledge of a client’s order to profit. The option “insider information” refers to the information itself, not the act of trading. For example, a company closely guarding earnings results and a insider trading on that confidential data would be engaging in insider trading.