Kim, an employee of a telecom company, accidentally receives confidential information about an upcoming acquisition bid. She tells her fiancé Sam about it over drinks. If Sam were to trade stocks based on this non-public information before it was announced, it would be considered illegal insider trading. Insider trading involves trading securities using privileged, non-public information in breach of fiduciary duty, and both Kim and Sam could be found guilty of it based on these events.

1. What is Insider Trading? Kanchan Shine

2. Overview This presentation explains the definition of insider trading through an example.

3. Meet Kim & Sam Kim is a Key Account Manager at SpriteStar International – a leading telecom company. Sam, her fiancé heads his own recruitment consultancy firm.

4. Kim’s Got Mail This morning as Kim was checking her emails, she received an email from the accounts department. It contained information about a new bid that her company was going to make to buy over another telecom company.

5. Kim’s Got Mail Realising that the email was sent to her by mistake, Kim deleted it and carried on with her day’s routine.

6. At the Pub In the evening, Kim met Sam for drinks at the local pub. While discussing their day’s events, she mentions about the email she received. Sam suggests that they should keep an eye in the newspapers for any such news. He also mentions that he would pick up some stocks of SpriteStar the next morning.

7. Think About It Has Kim unknowingly disclosed her company’s inside information to Sam?

8. Think About It If Sam trades in stocks of SpriteStar ( based on the information provided by Kim) , would the trading be considered illegal?

9. Think About It Would Kim & Sam be guilty of insider trading ?

10. Insider Trading The answer to all the questions is YES! Kim has unknowingly divulged company confidential information (inside information) to Sam. If Sam trades in SpriteStar’s stock, based on the information provided by Kim, the profit he earns will be illegal. If Kim & Sam use inside information to trade in stocks, then they will be guilty of insider trading.

11. Insider Trading Insider trading is the trading of an organisation’s stock or other securities by employees/individuals who have knowledge of non-public/confidential information about the organization.

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