What is it?
The definition of insider trading is when someone who has access to nonpublic information about a security sells or buys it in order to make a profit. This is illegal because the information is private and is not to be used to allow someone to either sell off shares because they will most likely go down or to buy shares because they have information about their increase in value. Once the information has been made public, however, buying and selling of the security becomes legal.
Why is it in the news?
Stories about insider trading come up regularly as they are often brought to trial when discovered. There have been recent trials in New York, the most famous of which was the one of billionaire Raj Rajaratnam, the Galleon Group LLC hedge fund manager, as it was the biggest victory the US government has had in trying to convict insider traders.
How can I use it in class?
Write the word: ‘white-collar crime’ on the board and ask students if they understand what this means. You can explain that these crimes are generally committed by people in higher positions who have access to nonpublic information and usually cheat others out of money. Ask student to brainstorm different types of these crimes. Ask them if they have heard of any examples of these crimes in their countries.
Ask students to match these legal words with their definitions. Check answers, then ask students to read the two articles below.
A a plan to do something illegal with other people
Where can I read about it?
1H, 2L, 3I, 4B, 5J, 6D, 7C, 8E, 9K 10A, 11F, 12G
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