{"id":445714,"date":"2022-08-30T11:52:42","date_gmt":"2022-08-30T10:52:42","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=445714"},"modified":"2026-02-02T16:06:56","modified_gmt":"2026-02-02T16:06:56","slug":"insider-trading","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/share-trading\/share-trading-guides\/share-trading-glossary\/insider-trading","title":{"rendered":"What is insider trading?"},"content":{"rendered":"

No-one likes a cheater, and least of all, one that gets rich using an unfair advantage. That\u2019s why insider trading rules exist. They stop privileged bosses and professionals making money unfairly on the stock market<\/a> by using their secret knowledge. Learn what insider trading is, why it\u2019s so bad and what the rules mean for you.<\/p>

What is insider trading?<\/h3>

Insider trading is when someone in a privileged position, like an employee, uses secret information to help them make money on the stock market. They might know privileged financial information about a company that\u2019s not publicly known and will affect the share price of the stock in the future. If they act on this information they could profit big time as they effectively have a crystal ball and can predict share price movements.<\/p>

The problem is that making money from privileged insider information is illegal. Stock market trading needs to be a level playing field for investors, otherwise insiders can rip off other investors. They can buy or sell shares<\/a>, knowing they are worth a different amount to what they have paid.<\/p>

How does insider trading work?<\/h3>

Insider trading occurs when investors find out secret information that\u2019s not known to the public. They then use this information to profit from buying and selling shares. They can make money because they know in advance which way the share price will move.<\/p>

Trading as an insider includes tipping off others with information, like friends and family members. If a friend receives a tip-off from an employee and uses this information to profit on the stock market, they are both acting illegally and could be prosecuted.<\/p>

What are the insider trading rules in the UK?<\/h3>

The UK insider trading rules are set out in the Criminal Justice Act 1993. According to the rules, an individual is committing a criminal offence if:<\/p>