Definition of Insider Trading

This video provides a defintion for insider trading; there are two forms of insider trading and one of them is actually legal.  It is legal for company employes, who file the appropriate paperwork, to buy and sell a companies stock.  This is actually a very closely monitored piece of information by other potential investors.  Investors feel more comfort and conviction in buying a stock which has corporate executives putting their money into that same stock. 

There is a fine line however.  Legal turns into illegal activity when insiders start buying and selling stocks based on information which has not yet been made available to the public.  While it is illegal, it happens every day by insiders in the company and by others who get wind of non-public information from an insider in the company