What is insider trading and how is it regulated on Wall Street?

Insider trading is the act of buying or selling a security based on non-public, material information that is not available to the general public. This can include knowledge of upcoming mergers, acquisitions, earnings reports, or other significant events that can affect a company's stock price. Insider trading is illegal and can result in significant fines, imprisonment, and reputational damage for the individuals involved as well as the companies they work for.

Regulation of insider trading is handled by the Securities and Exchange Commission (SEC) in the United States. The SEC requires that all insiders, defined as officers, directors, and 10% shareholders, report any transactions involving their company's stock to the SEC within two business days of the transaction. The SEC also prohibits insiders from trading on non-public information, and actively investigates and prosecutes individuals and companies suspected of insider trading.

In addition to federal regulation, many companies have their own internal policies and procedures for preventing and detecting insider trading. These policies may include restrictions on when employees can buy or sell company stock, mandatory reporting of all company-related transactions, and mandatory training on insider trading policies and regulations.