SIE practice questioneasyInsider Trading
Under the law, which of the following is required for a person to be guilty of insider trading?
- AThey received a tip from an analyst’s public report.
- BThey made large trades in a thinly-traded security.
- CThey traded a security based on material, non-public information.✓ Correct answer
- DThey sold their company stock during regular trading hours.
Explanation
Why C — They traded a security based on material, non-public information.
Illegal insider trading occurs when someone trades based on material, non-public information. Large trades, trading during regular hours, or relying on public analyst reports are not illegal by themselves.
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