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Insider trading involves trading in a public company's stock by someone who has non-public, material information about that stock.

Insider trading is illegal because it undermines investor confidence in the fairness and integrity of the securities markets.

Consequences can include civil and criminal penalties such as fines, disgorgement of profits, and imprisonment.

Legal insider trading happens within the confines of company policy and securities laws; illegal insider trading involves breaching a fiduciary duty or other relationship of trust and confidence while using non-public material information.

Insider trading can harm shareholders by creating an unfair trading environment in which insiders profit at the expense of uninformed investors.

The SEC enforces laws against insider trading, conducts investigations, and can levy fines, impose trading bans, or pursue criminal charges against violators.

Companies can implement policies such as trading windows, black-out periods, and clear guidelines on handling non-public information.

Material information is any information that a reasonable investor would consider important in making a decision to buy, hold, or sell a security.

The mosaic theory refers to a defense where an analyst pieces together non-material public and non-public information to arrive at an investment conclusion without violating insider trading laws.

Chinese walls are policies and procedures to prevent communication between departments that could inadvertently lead to sharing inside information.

Insider trading is considered unethical because it represents a breach of trust and contributes to an uneven playing field, which goes against the principles of fair competition and market integrity.

Whistleblowers can provide valuable information to regulatory bodies about illegal insider trading activities, aiding in the enforcement of laws and deterring potential violators.

Tipping occurs when an insider or someone with non-public material information passes that information to another person who then trades on the basis of that information.

Insider trading laws aim to ensure that all market participants have equal access to information, which can enhance market efficiency by ensuring prices reflect all available information.