Trading securities on the basis of material non-public information is illegal in most major markets. Insider trading is that practice. Corporate officers, directors, employees, and others who receive confidential information through their position or through a breach of duty are prohibited from using it for personal gain in the stock market. The prohibition protects the fairness and integrity of the markets.

Enforcement relies on detection of unusual trading patterns, tips, and cooperation agreements. Penalties include fines, disgorgement of profits, and imprisonment. Not every trade by an insider is illegal; trades made under pre-arranged plans or after information has been made public are generally permitted. The key is whether the trader possessed and used material non-public information in breach of a duty.

High-profile cases keep the issue visible and reinforce the principle that informational advantages obtained through position rather than analysis should not be exploited. Compliance programs, trading windows, and pre-clearance procedures help companies and their personnel stay on the right side of the law. The rule remains a cornerstone of securities regulation.