Which one of the following statements is correct?
A) Company insiders are not permitted to trade their employer's securities.
B) Only tippers can be accused of illegal insider trading.
C) Tippees are permitted to trade securities based on information they know is private.
D) Trading on private information which you just happen to overhear is legal.
E) Any trading based on information known to be private is illegal.

Question

Quizplus · Accepted Answer

Trading on private information is illegal for both company insiders and outsiders. It is considered insider trading if the information is obtained from a company insider and the person trading on it is aware that it is non-public information. Different levels of liability may apply to the tipper and tippee, but both can be accused of illegal insider trading. Overhearing private information is also considered illegal if the person knew or should have known that the information was obtained in violation of a duty of trust or confidence.

Which One of the Following Statements Is Correct