Insider-Trading Horror Stories: The Covid-19 Files

The tentacles of the Covid-19 pandemic left no corner of American life untouched. Now they have even entered the annals of insider trading. Recent insider-trading charges brought by the Securities and Exchange Commission (SEC) and federal criminal prosecutors offer jolting lessons for all employees and executives who learn confidential corporate information and may then be tempted to trade the company’s stock. (Long story short, don’t.)

What Is Insider Trading?

Insider trading, which is illegal, occurs when someone trades a company’s stock or other securities when he or she knows what is termed material nonpublic information (MNPI) about the company. MNPI is confidential knowledge about a company that will affect its stock price either positively or negatively when it is publicly disclosed. A related behavior known as insider tipping is also illegal. It means sharing MNPI with others.