Insider trading happens when someone with access to unpublished, price-sensitive information about a listed company trades its shares (or passes tips) before the information becomes public. This gives them an unfair advantage and undermines trust in the market.

Directors, senior management, auditors, and even certain consultants or lawyers may often be “insiders”. They may know about upcoming results, big contracts, mergers, regulatory actions, or serious problems before ordinary investors do.

Regulations typically prohibit:

• Trading while in possession of inside information,
  
• Tipping others to trade,
  
• Using friends or relatives as fronts.
  

Companies are required to maintain trading windows, blackout periods, and structured processes for pre-clearance of trades by key persons. They also maintain lists of “designated persons” and track their trades.

Enforcement agencies can impose heavy fines, disgorgement of gains, and sometimes even criminal sanctions. Evidence can be a mix of call records, trade patterns, emails, and witness testimony.

For anyone close to sensitive information, the safest rule is: when in doubt, don’t trade. Market confidence is built on the belief that everyone is playing by the same basic rules.