MEANING
illegal trading in stock exchange for the benefits by the means of confidential information from the company by the key managerial person of the company which would be a chairperson, boards of directors, company secretary, president, vice-president, treasurer, the comptroller, the general council, general manager, managing director and other who work in the entity more then normally performer who passes unpublished price sensitive information in respect of shares.
A person shall not deemed to be connected directly or indirectly to an insider or connected person.Insider can be any person who is connected to a company or has access to secret information which is not been publicly published.
INSIDER TRADING LEGALLY PERMITTED
Insider trading are legally permitted to buy and sell shares of the company and to any subsidiaries that employ them. The transaction must be properly registered with the securities and exchange commission (SEC) and it should be done in advance filing.This type of legal insider trading happens often.The details about it is available on securities and exchange commission (SEC).
PUNISHABLE
An insider trader directly or indirectly is guilty of offence is punishable with fine not exceeding the greater of one million dollars and three times the profit made or to the imprisonment for the term not exceeding six months or to both.
Insider trading is prohibited by security board exchanges of India (SEBI) for the benefits of the common investors and to promote healthy and fair trading in stock exchange.
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