Board of DirectorsA member of the board of directors of a firm knows that a firm plans a major divestiture that will result in significant costs and write downs.
Executive ManagementAn executive knows a firm plans a major investment in a new facility. The firm is unprofitable and burning cash at a high rate. As such, this news is likely to cause a drop in stock price as investors are concerned with the cash position of the company.
EmployeesA line manager at a factory knows that a firm is failing to meet its production targets due to incidents that caused significant downtime to production lines. Based on this, he knows the firm can't possibly achieve its quarterly revenue target.
PartnersA manager at a supplier to a mobile device company knows that a significant design flaw has been found in a critical component for a highly anticipated new product. Based on this, she knows that the product launch will be delayed by more than a month. This is material to the stock price as this will certainly impact revenue targets and shake investor confidence in the firm.
Third PartiesAn analyst with a hedge fund is good friends with an executive at a small IT company. During a night of drinking, the analyst learns that the firm is about to be acquired by a larger firm at a significant premium to the current stock price.
NotesInsider information is not necessarily material information. For example, an insider may know about a new product feature that is known to the public. However, this information may be unlikely to influence the stock price.
|Overview: Insider Information|
Non-public information about a company that is known to the stakeholders of a firm and potentially communicated to third parties.