Can one conceivably be accused of insider trading without being considered an insider at the company you work for? Is that classification by your company more just a way of categorizing employees and protecting them from themselves (with the insider black-out periods) or is it basically impossible for someone who isn't classified as such to be accused?

My personal scenario is I am NOT on the insider list. But I do work in some capacity with Finance. I make a lot of trades of our own stock and am usually successful at buying low and selling high / I think I'm mostly lucky.

Example: Right after Brexit I bought all the stock I could afford cause it tanked and I saw no logical reason why it should. Like most companies, it went back up later - yeah!

  • 3
    My understanding is that you can be accused (and even convicted) of insider trading if you have inside information. I presume your company designates those who are likely to have inside information as "insiders." But suppose you came across a confidential report to which you were not supposed to have access, and then used that information to make a trading decision. The fact that you were not on the insider list would not protect you from prosecution.
    – phoog
    Sep 16, 2016 at 18:48

1 Answer 1


In the US, "insider trading" includes both legal and illegal versions. When a corporate employee buys or sells shares of their company, they are insiders and they are trading (there is a requirement to report to the government). The illegal version involves breach of fiduciary duty or confidence. The relevant section of the federal regulations is 17 CFR 240.10b on "Manipulative and Deceptive Devices and Contrivances", and you will note that the section does not rely on the term "insider" in the law part, instead it directly characterizes what acts are illegal. Thus it would not matter, from a legal perspective, if someone considers you an insider.

It is illegal to trade in securities using a “manipulative, deceptive, or other fraudulent device or contrivance”. This relates to what is commonly known as insider trading via rule 240.10b5-1, by defining as manipulative and deceptive trading

on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information

(emphasis added to focus on the core requirements). Whether or not you have a "duty of trust or confidence" is determined by common law standards, that is, it depends on how courts have ruled on similar matters. For instance if the CEO of Apple tells you "Our computers explode and it's gonna be on the news tonight, the stock is gonna tank, but it would be illegal for you to act on that information", then it would be illegal, because you are aware that the CEO has a duty to not use that information (thus you "inherit" the duty). This also holds if he doesn't tell you that acting on the information, since it is expected that you know that the CEO of Apple could not legally act on that information (even if in fact you are unaware of the law -- ignorance of the law doesn't get you anywhere good). However, if you are unaware and could not know that the person making the factual disclosure is divulging information that he has a duty to shut up about, then you might not get prosecuted.

  • Interesting... "...ignorance of the law doesn't get you anywhere good." What about ignorance of how to commit a crime? Your example of "Our computers will explode" -- those clear cut definitive reasons never seem to exist in real life. It's more like, oh the street said we would be x, but we came in at z and our stock did y. My point being: It seems smarter people than me commit insider trading crimes. I have access to all our financial transaction level data. I don't think I could commit a crime with it if I tried. So, maybe I shouldn't really worry?
    – maplemale
    Sep 16, 2016 at 20:59
  • At one company where I worked there was a regular blackout period for top management- and for accountants. So you might be very well classified as having insider information.
    – gnasher729
    May 14, 2020 at 20:30

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .