What is Insider Trading?

Insider trading is a term that describes the making of transactions in the securities of a company that is listed on a stock exchange by people who have access to insider information in that company. Depending on the country, such activity may be viewed differently in legal records and may even be punished.

Is Insider trading fair?

Some investors believe that this type of action can negatively affect the evaluation of the company, and therefore the subsequent value of its shares. Therefore, there is an ongoing dispute about who could have access to classified information about the company, which can then be used. Above all, insider trading would give those using it a very big advantage over the market for this reason it is prohibited.

When can you use Insider Trading?

In several countries, including Poland and the U.S., among others, it can be considered illegal to do so. Among the legal consequences that apply in Poland are a fine of up to 5 million zlotys and up to 5 years imprisonment. These penalties apply to those who use undisclosed information about a company that can change its situation on the market and thus make a profit on securities. However, one must admit that proving insider trading, is often very difficult.

Has it had any negative consequences in the past?

Insider Trading is cited as one of the causes of the great crash, taking place in the 1930s in the United States, right next to market manipulation and lack of disclosure of information that was generally available.

Could insider trading occur in Poland?

Although the law in this case imposes great rigor, if classified information is not used before its official publication and does not affect the price of securities, it can be used to make a profit.