Insider trading is illegal in Australia… but what is an insider trading definition?

The simplest definition of Insider Trading is taking advantage of information that is not public.

This 'inside' information is most often seen as being used to give someone an unfair advantage in the buying or selling of shares or stocks.

Australians are now more likely to personally own shares in companies in which we work or where a member of our family or close friends work. When you include superannuation even more Australians own stocks and shares. Everyone would appreciate knowing ahead of time if a stock is likely to rise, or if it is about to fall.

It is considered natural to ask friends or family who work for companies on the Australian stock exchange for insider information on trading tips of shares. Your innocent question over a BBQ of "what's happening at work?" could however land you, and your friend, in court facing insider trading penalties? It depends on whether the information being shared is already 'public' knowledge. If your friend’s answer convinced you something significant was about to happen and that you should be selling, or buying, shares then a court may consider it insider trading?

Likewise how would the law courts consider if you saw a confidential report on the photocopier at work about a major loss or new investment and bought or sold shares? What if based on the information you had seen you told some friends or family to expect shares prices to change? Insider trading can appear quite innocent, but the reason Australian Courts treat it as a crime is that it gives 'insiders' an unfair advantage over the general public.

This video includes a brief definition of insider trading.
 

Other Insider Trading blogposts

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Insider trading stock tips at family reunion
Decriminalising insider trading proposal
Legal and illegal insider trading