Insider Trading

(The weekly series - Pocket Money - where I explain financial basics in fewer than 200 words. Feel free to make suggestions!)

This is the illegal practice of trading stocks or securities based on material, non-public information about a company. Basically, using secret info for gain. It’s illegal because it gives certain people an unfair advantage which undermines market confidence. 

For example, if a company exec knows their company is about to announce poor earnings and they sell their shares before that becomes public - that would be insider trading. It also includes trying to induce somebody else to do it and it includes attempting to do so (so they can get the baddies even if they don’t succeed). 

Conviction can lead to significant fines and imprisonment. Monitoring and enforcement in the UK is carried out by the FCA under the Market Abuse Regulation (MAR).

In 2021, the government acted specifically to include transactions around the sale of emission allowances which are tradable instruments which allow companies to offset their carbon footprint.

Love Eleanor. xxx