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Answer:
Let us say you are the managing director of ABC Bank Ltd which is a stock market listed company. After weeks of negotiation you know that ICICI bank the country's leading bank has accepted to buy your company and issues shares of its own company to investors who hold shares of your company. As any intelligent investor would know, shares of an ICICI Bank are much more valuable than shares of an ABC Bank. Once this news of ICICI acquiring ABC Bank goes public people will start accumulating shares of ABC Bank so that they can benefit out of the acquisition. This will send the price of ABC Bank skyrocketing. So, knowing this information, if you buy shares of ABC Bank for your personal share trading account before this news goes public, you can sell them off once the acquisition is complete and the share price has exploded. This way you gain an undue advantage and make a profit at the expense of the company.
This is insider trading.
Yes - it is a fraudulent Activity
This is insider trading.
Yes - it is a fraudulent Activity
First answer by Anandvijayakumar.
Last edit by Anandvijayakumar.
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