What does insider trading refer to?

Insider trading refers to the buying or selling of securities based on non-public, material information. This is considered illegal because it creates an unfair advantage over other investors who do not have access to that information. Material information is any information that could influence an investor's decision to buy or sell a stock. When individuals with access to this confidential information act on it for personal gain, they violate securities laws aimed at maintaining a fair and transparent trading environment.

By understanding the significance of non-public information, there is a clear distinction between lawful trading, which is based on publicly available information, and unlawful insider trading. The other options describe scenarios that do not encompass the essence of insider trading as defined by law and regulation. For instance, legal buying based on public information does not constitute insider trading since it involves information available to all investors. Similarly, trading at insider meetings does not define insider trading unless it involves undisclosed material information.