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Inside Information

Updated on March 14, 2023

Inside Information, also known as Material insider information or non-public information refers to a company’s information which has not yet been shared with the public and is likely to have an impact on the company’s share price once it is out.

Is inside information available to investors?

Investors generally make stock investment decisions based on the information available for analysing and assessing a company’s performance. Thus, information which is likely to affect the share price, either positively or negatively, is classified as inside information.

What are the examples of Inside Information?

Some items which constitute Inside information are :
1. Information related to the company’s results, not yet shared
2. Change, addition, removal in the company’s board of directors
3. Corporate action announcements
4. Revision in Financial statements
5. Earning miss
6. New product launch

How can companies prevent leakage of Inside information?

Most companies have ways to prevent leakage of Inside Information or restrictions on sharing financial information. Some of these are :
a) Mechanism to prevent the sharing of non-public information from one department to the other within the company
b) Restriction on trading by employees/their families, relatives or friends
c) Data prevention and encryption
d) Monitoring information access