Today we will talk about who an insider is. On the modern market insiders are usually called persons who have information that is not available to most market participants.

The information that insiders possess is usually obtained from primary sources and is not disclosed to a wide audience. A narrow circle of people has access to information from insiders, which is very important, since, if used correctly, it allows you to make serious profits.

Who is an insider. How do they appear

To answer the question of how insiders appear, this term should be specified. So, for example, if a group of people calls themselves insiders and announces any information, then this, most likely, will not be reflected in the market situation.

To answer the question of who an insider is and how they appear, one should decide who can play this role. Large shareholders, as well as managers of various corporations, can act as insiders.

If the persons described above, possessing important information, make transactions in the stock market, then they violate the rights of other shareholders. Suppose the manager of a company knows that it is in danger of going bankrupt. In this case, he tries to sell the available shares until the other market participants have received information about the upcoming bankruptcy of the enterprise.

At the same time, the appearance on sale a large number shares of the company significantly accelerates the processes leading to its bankruptcy.

Because of the reasons described above, the activity of insiders is considered to be fraud.

1. The Central Bank, as well as the government of the country, as they have classified information that is not available to most market participants.
2. Rating/information agencies.
3. Credit institutions, as well as depositories, as they are directly involved in organizing trading on the stock market.
4. Issuers various types/ bonds.
5. Stock brokers provided that they receive important information from large companies.
6. Persons who are members of the board of directors and own a block of shares from 10% of various corporations.
7. Specialists engaged by corporations to assess the current value of blocks of shares / bonds. As a rule, such an assessment provides information about the current position of the company. With this information, you can get a significant income from trading in the stock market.

How insiders trade

Having figured out who an insider is, you should dwell on exactly how they conduct trading. An insider concludes deals only on the basis of confidential information about the issuing company of certain securities.

At the same time, it should be remembered that the actions of an insider can be recognized as fraudulent only after it is proved that he is trading on the basis of information obtained illegally or in a private conversation.

If there is no clear evidence, then the insider's actions are considered legal.

Many investors try to keep track of individuals who may act as insiders and repeat their actions. This is because the insider, who has confidential information, knows perfectly well at what exact moment it is best to buy shares / bonds of the company, and when it is best to sell them.

The main problem is that it is quite difficult to determine who exactly is an insider. This is due to the fact that managers of enterprises or large shareholders can purchase or sell shares / bonds for reasons not related to obtaining information that is not available to other market participants.

Insiders in the domestic market

On the domestic market Insiders are commonly referred to as unscrupulous employees who sell confidential information about their business to competitors. The term "insider attack" usually refers to the leakage of confidential information. Credit institutions are the most sensitive to such attacks.

Practice shows that if 20% of confidential information is leaked, more than 60% credit institutions become bankrupt. This is due to the fact that insider attacks lead to a significant reduction in the customer base, as well as a loss of reputation. Since a good reputation among customers is simply necessary for a credit institution to function successfully, its loss in most cases is the main reason for bankruptcy.

Unfortunately, most private traders do not have access to insider information that can be used to generate income. If you have some experience, you can follow potential insiders and repeat their actions.

AT modern world insider is a very common concept. It is applicable in various fields. economic activity. In a general sense, an insider is an individual or entity, which, due to its position, has access to valuable (mainly, of course, from an economic point of view) information.

Term

An insider (from the English “located inside”) is a member of a group of persons who have any important information. Moreover, he actively operates - for the most part for his own benefit. In the media, the word has become synonymous with the concept of "source in ...".

An example of insider altruism is American intelligence officer Edward Snowden, who revealed to the world classified information belonging to the US National Security Agency. But, as a rule, such persons in a certain group have not only knowledge, but also sufficient power and means, and use their position only to acquire additional benefits. In contrast, external specialists of the company can only analyze the information received, having no idea how reliable it is.

Another striking example of an already self-serving activity is the well-known Wall Street scandal associated with the names of Michael Milken, Ivan Boschi, Martin Siegel and Denis Levine. It all ended with real terms and huge fines. You can read about this in a book called The Greed and Glory of Wall Street. Feature films are still made about the speculations of American moneybags.

Insider Information

Often this concept is associated with super profits. large corporations. Meanwhile, as in any organization, so in a political party there are areas that are closed from outside access. This is classified information, not intended for ordinary citizens, - the latest technology, advanced developments, financial reports, certain groups. And since real people are involved in all these processes, they are insiders who can deal with this information. No wonder he said that knowledge is power. And in the modern world, such persons are becoming a serious weapon to achieve both political and economic benefits. And the activity of an insider can undermine the work of a large corporation and break the career of a major public figure. And even though the term itself initially did not have a negative component, more and more often insidership is associated with personal self-interest.

Because of the above, it is clear that the attitude of ordinary people to this phenomenon is mostly negative. This is supported by various conspiracy theories. For example, rumors about the existence of the Illuminati group. An insider of this secret society allegedly reported that the higher ones of this world planned to reduce the population of the globe by ninety-nine percent. One of the ways they have chosen is products made using GMOs. The latter is said to drastically reduce the capacity of the human reproductive system. Films are also made on this topic.

Right

Members of criminal gangs or corporations that break the law can create "leaks" leading to the disclosure of such acts. With a purpose, of course.

Finance

Often insiders - shareholders or board members of large corporations - use the information they have about the position of the issuing company for transactions in the securities market. Such transactions are not always legal.

Politics

In ordinary life, insider information is information (social life, economics, ecology, etc.) that contradicts the point of view of the authorities and at the same time is reliable. Sources in this case can be both politicians and scientists, journalists, cultural figures.

Business

An insider is a major shareholder, as well as a senior manager of a corporation. All of them have important information about the state of affairs of the company.

Banking

A bank insider is a natural or legal person who is aware of the financial situation due to his official position. Shareholders and their relatives may also have such information. Here it is necessary to clarify who are "physical" and who are "legal" insiders.

1. Persons owning shares in the bank, shareholders.
2. Senior management: from the chairman of the board of directors to the chief accountant.
3. Leaders structural divisions, as well as persons who, by proxy of the auctioneer, have the right to vote at meetings.
4. Auditors, auditors and representatives of control bodies.
5. Relatives of all the above persons.
6. Associates of institutions associated with the bank.

1. Participants and institutions that own significant shares of capital in the bank; as well as enterprises, significant parts of which are owned by the latter.
2. Organizations whose leaders are shareholders, senior managers and controllers of a credit institution.

How to protect yourself from insider trading

Commercial and other organizations take steps to keep information secret. There are both legislative and hardware tools for this. Among the latter, special computer programs, such as "Insider", which "hide" electronic data.

Important documents are stored in specially designated places under the guise of other information, say, graphic files. And for a non-professional, this data on a computer does not seem to exist at all. And only when you enter the correct password, the desired folders are available. True, the files that the program can delete are no longer recoverable, and the application itself uses the Internet. So there is also the risk of dissemination of information on the World Wide Web.

What the Insider Program Can Do

1. Data encryption.
2. Hiding confidential information.
3. Unlimited size of processed data.
4. Data exchange via the Internet.
5. Permanent deletion of files.

Other standard antivirus protection programs and authentication systems are also used. In general, any self-respecting organization should have a security policy.

The law on insider information is one of the legal methods of combating the dissemination of classified information. It has already received many amendments. This legal act defines the list of persons related to insiders, as well as the cases when an individual or legal entity can acquire such status.

According to the law, it is illegal to use insider information to manipulate stock prices and personal enrichment. This is because it hinders competition in the financial market.

List of insiders - what is it? The law obliges organizations to compile a list of employees who are granted access to classified data. Individuals may also have insider information due to their position. The possibility of working with secret documents and responsibility for this is stipulated by labor and civil law contracts.

There are so-called "primary insiders". These are the persons who directly receive secret data. In addition to them, there are also "secondary". They have access to insider information already through the former.

Information about insider activities

Such information is, in principle, available to everyone. They are essential for making decisions about whether to buy or sell stocks. In such cases, it is important to remember the following. Most of the deals that insiders make are designed to grow their companies in the long term. Therefore, a serious and thorough analysis is needed. And the sale by one of the major directors of an insignificant part of his shares should not be misleading. It is necessary to act only when several shareholders begin to get rid of securities. And the director, who not only receives a salary in the company, but has his own assets in it, is a much more indicative object for analysis.

Information about such transactions can be found on many specialized sites, which even have insider sections. There is always something interesting on them. However, this or that site can be controlled by an insider. Reviews on such resources should therefore be read very carefully.

This article, of course, does not pretend to reveal the entire topic in its entirety. There are many nuances to insider trading. Everyone already understands that there is little good in it for ordinary people, but in modern conditions market economy this phenomenon must be treated as a fact.

08/15/2009 - The insider is already a lump in the throat. Who just does not write about him. I had to collect materials, and they brought results - during these studies, he was not only discovered, but also neutralized ... Read about it:

We are forced to consider this issue not because it is now popular on various forums on the Internet, but this issue is relevant for the reason that the insider, as he calls himself, is in fact a protege of Lucifer since the time when Rus appeared in our virtual world .

We know about Lucifer's attempts to destroy the collective system of organization of Life, which is alien to his nature. And when Russ appeared on Earth, Lucifer built mechanisms to fight them. At the same time, he selected a candidate for the position of the Earth Ruler, to whom he could entrust his powers, since. the remoteness of the Earth made it difficult for him to quickly influence emerging problems. At that time, we know this from religious sources, a double of Lucifer ruled on Earth. He could not complete the task, the Ruses discovered him and expelled him to the lower spheres. After that, Lucifer began to select a new candidate. However, the Russ also saw through him, and the devil was also sent to the lower spheres. After that, Lucifer had new task: organize a secret candidate that no one on Earth could figure out, but who would have all the means to achieve the ultimate goals of Lucifer.

Finally, about 2000 years ago, a new representative of Lucifer appeared - an insider, whose task was that he had to assemble a team for himself to counter the Rus. He performed his task conscientiously, tk. was devoted to Lucifer, considering him the Creator, above whom there is no one.

During this period, the Ruses had already settled down in many regions of the planet, creating the Slavic peoples. Therefore, the insider worked secretly, creating a structure to counter the Rus. At that time, the Ruses owned not only the Earth, but also confidently climbed up the spiritual ladder to the Higher spheres, opposing Lucifer at every step of the ascent. In turn, the insider who selected the team acted in secret and was very active. He felt support from above, and this was transferred to his servants, who unquestioningly obeyed him. And Lucifer observed their activities through the secretly created Department in the Higher Spheres. He still had a strong influence in this area and conspired it under the Research Department, so he did not attract external attention to himself. At the same time, Lucifer foresaw that the true purpose of the Department could be subsequently revealed by the Rus, so the channels of communication with this Department were carefully protected, and other mechanisms were also used to hide its true purpose.

The main force of Lucifer was concentrated in this Department, through which throughout the subsequent period he implemented his main plans in countering the Rus. This centuries-old confrontation was carried out with the help of conspiratorial measures even when the Rus had already risen to the level of this Department, mastering the expanses of the Higher Spheres. It continued to function in our time up to the very last moment, when there were no more instructions from Lucifer. As a result, until very recently, this hierarchical elite, through an insider on Earth and his secret agents, continued to influence earthly events with the same persistence as before.

The insider's group exerted a destructive influence in those areas where the Rus settled their lives. Their space patrons developed a plan of action for them and received data on the results of working out the assigned task. Their main task was primarily to organize contradictions within their zone of influence. Yes, they were all assembled from Jews, but they differed from virus carriers in that the instructions they received did not come to them from the civilization of viruses, but from the cosmic fiefdom that Lucifer created for tacit - hidden pressure on the Rus. Such control was embodied through a secure communications support network between Division and Earth. They were introduced into the authorities and law enforcement agencies. Here they occupied the main levers of control in order to be able to manipulate the actions of subordinate structures, but especially in recent decades. They secretly built the mechanisms of destruction and opposition to the creative motives that are inherent in the Slavs. They secretly destroyed its culture, and even destroyed the people themselves. So from century to century, this group, as its supporters grew and led by an insider, intervened in the most hidden areas of life within states, organized provocations and wars, intensified conflicts between states, and destroyed the cultural and historical heritage of the Slavs. Please note that these are not Freemasons, whose structure was built by the civilization of viruses. The insider and his agents are a separate parallel branch of the destroyers of the harmony of life. They had different end goals.

Their activity consisted in inciting conflicts within the Slavic peoples, their separation, destruction national cultures. In fact, they worked in the same direction as the virus carriers, but they themselves had no direct relationship with them. Only a few episodes of their meetings with Freemasons show us that they worked in close directions and coordinated activities among themselves, if their intentions are in contact. Such interaction allowed them to share their tasks and go on a parallel course, virus carriers - to enslave earthlings. Insider agency - to destroy what the Rus have created, up to the destruction of this Slavic community as such. This is their main task. recent times most noticeable in the example of the division of peoples within countries, and even in the split of countries into small territories.

The insider's designs did not cling to short periods of time. He built his plans for decades. They provided such a mode of their active life with the support of strict rules of non-mixing with other generic branches, including virus carriers. Therefore, they retained their genealogy, originating from the ancient Jews, right up to the present day.

Such a technology of life is difficult to implement on Earth. In this direction, they received support from their Department, which, through Lucifer, introduced the official technology of reincarnation specifically for their group. Reincarnation was provided to them by the technologists of the spiritual world in accordance with the program introduced officially as a research one. Therefore, no attention was paid to them - you never know what research is being done in space. They did not pay attention to the control channels, which were a separate branch, protected from listening. It is clear that such support could be provided to them for that period, while the cosmic status of Lucifer remained high.

Now this is not. Neither is Lucifer. And in the Department they felt the danger especially sharply, as soon as Lucifer stopped working with them. Perhaps he managed to pass on some instructions to them in the end, we do not know this yet. But now their entire information base has already been seized, and we still have to work with it...

Until the last moment, they still continued their active destructive activity, but panic seized them more and more. They lacked information about current state with the Source of supreme control. And on Earth, they already saw a stormy spiritual upsurge, accompanied by an increase in the activity of the cosmic Hierarchies, which sought to lead the Earth out of the bondage of Lucifer. They often proclaimed that a secret power ruled the Earth. And now the insider's agents began to get lost in the new information field. And they lacked confidence that they were not being used by some third force. Indirect search methods also did not give them results. Panic seized the insider too - something had to be done, but there was no support from above. Conflicting commands come from there ...

This period of tension intensified the situation even more. It was necessary not only to protect ourselves, but also to fill the information vacuum created in connection with the departure of Lucifer. And what will happen to the Department then? And what will happen to him and his agents, the insider did not know. He decided to take the most risky step - to conduct an information search not by indirect methods that did not bring results, but directly. The insider decided to signify his presence through the "revelations" of the insider. But this was his last step, because. such "bursts" on Earth are monitored in space as well.

In effect, this group capitulated to Lucifer's earlier venture to restore his rule on Earth. On a cosmic scale, their surrender happened earlier. They made up a secret structure and have long understood what threatens them with a further escalation of tension, and as a result, their plans will collapse.

In general, it makes no sense to describe his internal mental constructions. Some of this chaos of thinking is already known to us as the information base of the Division is revealed. Disclosure personal information directly in the minds of the leadership of the Division is also bearing fruit. And in this partially processed information, their aggressive nature is especially noticeable, which was also characteristic of Lucifer himself during the period of opposition to the Rus. It is not surprising that the same thing happens with his proteges, "entrenched" in the oasis of spiritual life in the Higher spheres. How can this happen, you ask?

This is how we, here in the Cosmos, were looking for answers to this question. And now everything is clear to us. Lucifer prepared this aggressive structure for long time. Therefore, its disclosure was not an easy task for us. Now it remains to switch them information base to the base of the CRC in order to model subsequent events on Earth more accurately, and correct them in the direction that is inevitable in any developing Civilization striving for spiritual growth.

Thus ended the story with the space department of Lucifer. Thus ends the confrontation of the insider on Earth. All their information channels are now under the supervision of the CCR. The subsequent task of the Central Control Commission is the deactivation of their aggressive intentions and their complete mental neutralization ...

In this article, we will continue the topic of the stock exchange and talk about insider trading and general concept"insider". Everyone who has dealt with investments must have heard about this term sooner or later. But what it means is a mystery to many. Let's try to open this veil. In total, this article will cover the following topics:

• Insider - what is it?;
• The concept of insider trading;
• Why is this instrument prohibited, but at the same time, the stock market cannot exist without it?;
• Insider trading in the foreign exchange market (Forex);
• Insider trading in Russia and The federal law RF N 224-FZ.

Insider - what is it?

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The American Securities and Exchange Commission considers an insider to be a shareholder of a company who owns at least 10 percent of the shares. As a rule, such shareholders are a kind of managing center and head of the enterprise in one person.

Accordingly, these people have direct access to non-public information relating to the activities of the company. That is, they know much more about the financial situation of the enterprise than small shareholders. And they will also be the first to know about any events that will lead to an increase or decrease in the stock price. Until such time as such information is not disclosed, it is considered insider information.

Insider trading is the execution of transactions using the same “non-public” information. Use it according to legislative norms most countries, in particular the United States and Russia, is prohibited. But, according to the statistics provided by the SEC analytical center, about 30 percent of all current transactions in the stock market are insider transactions.

Why insider trading is prohibited

Insider trading is prohibited for the simple reason that the very fact of its existence introduces a certain imbalance in the investment market. A small group of shareholders collects all the “cream”, while small investors only count the losses. If the situation today were the same as before 1934 (prior to this period, the concept of insider trading simply did not exist), then investments as such would simply not exist. It’s time to state it directly - it is on small investors that they hold large companies, brokers. Here, more than ever, the saying “With the world on a string” is relevant. And if confidence on the part of investors is undermined, then the entire investment market will simply lose the lion's share of capital.

What happened in 1934? The so-called Pecora Act was passed, which detailed the concept of an insider, the use of "non-public information" in stock trading, and how this could bring down the entire stock market of America. Simply put, the Pecora Act completely banned insider trading in the US. But for insider trading, the end did not come. The investment market at that time simply could not survive such drastic changes. But the first high-profile case concerning insider trading surfaced only in the 70s. Then the well-known company TGS, which was engaged in the extraction of minerals, discovered a huge mineral “pool” during research. Of course, as soon as this information got into the media, the price of TGS shares immediately increased several times. Charles Fogarty, vice president of TGS, decided to seize the moment - he bought a large block of shares at the current low price. Immediately after that, their price increased, and Charles was able to get rich by almost 150 thousand dollars in just a few days. Due to the indignation of small investors, the fact of an insider deal very quickly “surfaced” and a high-profile court case began over the management of TGS. It ended with huge fines (about $1.2 million). At the same time, the law regarding the use of "insider signals" was significantly tightened. Other countries followed the US example.

In the 80-90s of the last century, the phrase “false insider information” became a fairly common concept in the stock market. It was also most often used by unscrupulous owners of large blocks of shares. They spread false information through the media about the imminent collapse of the shares of a particular company, after which the price, of course, fell (the market reaction is instantaneous). And during the period of "embarrassment" it is possible for a symbolic cost to acquire the entire company, the value of which on the stock exchange drops critically. A similar situation once played a cruel joke on MISC, which developed processors with a unique architecture that is several times superior to traditional x86 and x64 processors in terms of performance. Competitors, stating in the media that MISC, when testing processors, found that their power is extremely low, and therefore such products will not be able to compete in the consumer market. Thanks to the publication of false information and a sharp collapse in the shares of the latter, competitors simply acquired a group of developers, and then disbanded their entire department.

But it should still be understood that without insider information, the investment market could not exist at all. Just its profitability in this case would be extremely low (no more than 10-15 percent per annum). In modern conditions, it is much easier to follow the actions of insiders, so their transactions are simply copied in real time. Insiders have become a kind of signalers for traders. Of course, at the same time, the first tried to “not step over the line” ... What kind of “line” is this? According to the same ill-fated Pecora law, insider trading was recognized as those that were made during one trading day with a subsequent sharp drop or rise in stock prices associated with events that were directly dependent on the actions of the company's management or the main group of shareholders.

The concept of "insider trading" in the Forex market

Do you think that the concept of "Forex insider" has a right to exist? Indeed, the fluctuation of the exchange rate of a particular currency pair is influenced by global events relating to the world economy. After all, it is simply impossible to find out about them in advance ... Or is it not quite so? Here, as an example, one can cite events when, due to the speech of one or another official at the Euro Summit, the exchange rate of one or another currency sharply increased or fell. Or the recent press conference of Vladimir Putin, after which the ruble somewhat rolled back from its rapid fall. Does anyone know in advance about the content of these people's speech? Of course, yes, and they are just a kind of "insiders" of the foreign exchange market. Do they make money with this tool? Most likely yes, since such people can afford to hire a professional financial analyst who is able to conduct sound fundamental analysis, taking into account “non-public” information.

Quite often, these same people who have access to insider data sell this kind of information for personal gain. For it, many "players" of the foreign exchange market are willing to pay huge sums.

But the trial of "forex insiders" has never been held. First of all, due to the fact that such transactions are very difficult to trace. In Russia, brokers are generally not required to provide anyone with information on completed trading operations in the foreign exchange market. Therefore, it is impossible to prove that a trader used insider data, and not publicly available information for analysis.

Insider trading in Russia and Federal Law N 224-FZ

In Russia, insider trading, as in most countries of the world, is prohibited. True, the punishment for such transactions is not significant. For an individual, for example, for this threatens a fine of up to 1 million rubles. For comparison: in the US, a trader who proves the use of insider information faces a fine of at least $100,000. And if a whole group of insiders profited from the deal, then they will have to fork out for 2.5 million "American presidents."

It should also be understood that in Russia the facts of the use of insider information are not so carefully monitored. And the Securities Commission is responsible for this. In the US, officials went in a slightly different way - they encourage ordinary participants in the exchange to "surrender" those who use insider data when trading shares. As a reward, such “gunners” are offered 10 percent of the fine that will be imposed on the violator. In the Russian Federation, the concept of “insider information” and its misuse are described in Law N 224-FZ. I recommend reading at your leisure - the document is very long, but it remains more questions than answers.

But still, in the Russian Federation there were several major scandals regarding the use of non-public information when trading shares on the stock exchange. For example, many people remember the situation around the Yukos company that took shape in 2003. Then the concern merged with another oil giant - the Sibneft company. And before information about this event was published in the media, each of the companies artificially raised their stock prices for a whole month. In total, stock prices rose by 24 percent then! Insiders who had advance knowledge of the subsequent merger of the two oil giants were able to make at least $10 million in that short period.

The second case concerns VimpelCom. Their main shareholder, Altimo, almost tripled its shareholding (up to 44 percent) literally within a month. Subsequently, VimpelCom received a state tender, which caused the shares to rise sharply in price. Telenor, the telecommunications tycoon's second largest equity group, immediately sued Altimo at the same time, alleging insider information. How did the legal conflict end? Telenor victory. Here it should be noted that the case was considered by the US court, since VimpelCom's shares were placed on the American stock exchange.

P.S.: Summing up, I want to remember that on this moment there is a real fight going on in the US against dishonest stock market insiders. The entire Wall Street at one time "stirred up" the trial of Raja Rajaratnam, the owner of the Galleon Group hedge fund. The billionaire was found guilty of using insider information in stock trading, and as a punishment he was sentenced to 11 years in prison. It was a kind of sign from the state for large stock exchanges and traders, demonstrating that "games with the law" sooner or later end not in favor of the latter.

I suggest discussing the topic in the comments. Perhaps you know interesting example using insider information or you yourself once made money on insider signals - write in the comments.

An insider is opposed to a specialist responsible for external audit and analysis in the company. Such an employee receives the information necessary for the management of the company using open sources, subjecting them to an extended and comprehensive analysis. As a result, all the information and conclusions obtained by the expert are included in the expert opinion, which is provided to a higher manager or the customer. The insider, on the other hand, acts directly and simply and communicates the confidential information known to him to the person concerned.

concept insider(eng. "insider") - means that a person belongs to a group of people who have access to classified information.

Usually such information is closed or completely secret. It appeals to a narrow circle of people, of which the insider is a member. In this case, the object of insider can be not only information, but also any knowledge, for example, the management scheme of a company or its individual division.

Since the birthplace of insider trading is the United States, when studying this phenomenon, it is worth focusing on American experience. For example, according to local law, insiders can be recognized as owners of more than 10% of the share capital of the company:

• its employees
• directors
• shareholders

Transactions of these persons with securities may be considered fraudulent due to the non-publicity of the information used for this. Naturally, a person who discloses such information will violate the obligations assumed by him to the shareholder. It should be noted that they are usually taken upon themselves when applying for a job or when buying shares in an enterprise. In addition, candidates for the boards of directors of JSCs can also be included in the list of persons working with inside information.

In the modern world, an insider is usually called any person who, for one reason or another, discloses classified information. Very often, journalists use this term when they need to refer to a source that they cannot disclose. In this case, such a phrase as "Source in ..." is used.

Russian features

Russian legislation also contains the concept of insider information. It was introduced in 1996 by the Securities Market Law. In addition, he also introduced the concept of proprietary information and imposed restrictions on its use in the case of transactions with securities. At the same time, there is an extensive list of persons classified as insiders. So, for example, they include:

• members of the management bodies of the joint-stock company
• auditors of a JSC, an issuer or a professional participant in the stock market
• employees government agencies, which are valid official duties access to the issuer's proprietary information

At the same time, both primary and secondary insiders are distinguished. The primary ones include not only the leadership joint-stock companies but also major shareholders. Such shareholders must own from five to ten percent of the shares of the enterprise. Secondary representatives of this category of persons usually have a connection with the primary ones, for example, they may be family members of the manipulators of such information or accidentally get it at their disposal.

Typically, insider trading companies maintain special lists of individuals subject to insider trading laws. They are prohibited from using the information obtained in the course of work to make transactions with securities, in addition, they cannot make such transactions through third parties.

Responsibility for conducting insider activities

The legislation of most countries condemns the activities of insiders, as they cause damage to financial market participants by their actions. At the same time, in order for insider information to be absent, in principle, it is without fail needs to be disclosed. Once inside information is published in open sources, it ceases to be insider information.

As for restrictions and liability for conducting insider activity, a number of foreign countries have established special rules for insider transactions with securities. So, for example, there is a restriction on the implementation of such transactions by directors and managers of joint-stock companies after two to three weeks after the publication of the company's annual report. There are other restrictions aimed at protecting the financial market from trading insider information.

The described type of activity is very strictly regulated in almost all countries of the world. For example, in the United States, an insider's income can be confiscated by court order, and a large fine is imposed on him in the amount of three times the profit he received. For more serious violations, he can even end up in prison for a period of ten years. Russian legislation also provides for both administrative and criminal penalties for such actions.

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