A common misconception among employees is that insider trading is only an issue for senior executives, because employees at lower levels don’t have access to “inside information.” Too many assume that they don’t ever come across the kind of information which, when acted upon, draws the attention of federal prosecutors.
In fact, employees at any level can possess information that could be used to make illegal stock transactions under U.S. law – and the laws of most other countries. A number of information types fall into this category: news about new products or manufacturing processes; possible acquisitions or divestitures; information about the Company’s finances or sales; or news about executives or business strategies.
It’s not uncommon for people to discuss these things with each other and even with friends and family. When the information is brought home and discussed with a spouse, U.S. enforcement agencies refer to it as "pillow talk," which puts the person disclosing the information and the person using it at risk. If any trade is made based on this information—including by the proverbial “friend of a friend”—everybody involved can be held accountable.
If you are exposed to information that might be considered material (meaning it could influence an investor’s decision to buy, sell or hold a stock), and is nonpublic (meaning the investing public is not aware of it), remember your obligations to keep the information confidential. One way stay safe is to avoid discussing major announcements before they become public, even with your family and closest friends. And, don’t think that your investments are too small to be noticed.
It’s pretty simple: trading or tipping based on material non-public information is against company policy—and the law.