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Insider Trading"Insider transaction" is a term that most investors give birth comprehend and usually associate with illegal conduct. But the term actually includes two legal and illegal conduct. The legal version is when corporate insidersofficers, directors, and employeesbuy and look at stock in their proclaim companies. When corporate insiders trade in their own securities, they must report their trades to the SEC. For more schooling near this type of insider trading and the reports insiders must file, please read "Forms 3, 4, 5" in our Fast Answers databank. misbranded insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and self-assertion, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misa ppropriate such information.Examples of insider trading cases that have been brought by the SEC are cases againstCorporate officers, directors, and employees who traded the corporations securities after learning of significant, mysterious corporate developments Friends, business associates, family members, and other "tippees" of such officers, directors, and employees, who traded the securities after receiving such information Employees of law, banking, brokerage and printing firms who were given such information to provide run to the corporation whose securities they traded Government employees who learned of such information because of their employment by the government and Other persons who misappropriated, and took advantage of, confidential information from their employers. Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and quest of insider trading violations as one of its enforcement priorities.The SEC adopted new Rules 10b5-1 and 10b5-2 to crack two insider trading issues where the courts have disagreed. Rule 10b5-1 provides that a person trades on the basis of material nonpublic information if a trader is " informed" of the material nonpublic information when making the purchase or sale. The bump also sets forth several affirmative defenses or exceptions to liability. The rule