Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Welcome back to Patrick Boyle on finance. Today's video is about insider trading and the lessons

we can learn from it. If you're worried about it being dull, rest assured,

we do have the biggest insider trading scandals here, but those scandals include strippers,

bombers, pickled sharks, and even Snoop Dog, for Shizzle. I don't really know what that

means. I was told to say it by a young person. Anyhow, while this was meant to be a top five video

right before filming, I found a sixth one that was so good I had to shoehorn it in. So stay tuned

to the very end. I guess what I'm trying to tell you is that I've got some good stories for you.

Now when most people hear the term insider trading, they think of the crime,

but insider trading is just the trading of a public company securities by people with access

to non-public or insider information about the company. There are rules about how insiders are

allowed to trade, forms they have to fill out, and so on.

And these differ around the world.

Insider trading becomes illegal when a person bases their trading decision on information that the public does not know.

It's illegal to trade stock in a company based on insider information and it's also

illegal to pass on that information to another person so that they can trade. In such a situation,

the person passing on the information is breaking the law, as is the person receiving it if they

trade on the information.

Securities regulators want to make sure that all investors are making decisions based on the

same information. And this is important because in parts of the world where such rules are not

enforced, the public lose faith in markets, which both makes

it hard for companies to raise money, as no one wants to invest without inside information,

...