Insider trading refers to the buying or selling of securities (stocks, bonds, etc.) based on non-public, material information about a company. This practice occurs when individuals with access to confidential information about a company’s future prospects, financial performance, or other significant developments trade shares before this information is made available to the general public.
Insider trading can be considered legal or illegal depending on whether the material information is publicly disclosed. Legal insider trading typically occurs when corporate insiders—executives, directors, and employees—report their trades to the relevant regulatory authorities, thereby ensuring transparency. In contrast, illegal insider trading takes place when individuals exploit undisclosed, crucial information to gain an unfair advantage in the market, potentially violating securities laws and undermining investor trust.
Regulatory bodies, like the Securities and Exchange Commission (SEC) in the United States, actively monitor and enforce laws against insider trading to maintain market integrity and protect investors. Penalties for engaging in illegal insider trading can include fines and imprisonment.
The Future of SoundHound AI: A Mixed Bag of Sentiments Recent fluctuations in the stock price of SoundHound AI (NASDAQ: SOUN) have raised eyebrows, with its shares down 35% year-to-date…